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Elon Musk could be distracted by Twitter, but Tesla is ‘his baby’: Analyst

Roth Capital Analyst Craig Irwin joins Yahoo Finance Live to discuss whether Elon Musk's Twitter ambitions will take away from his leadership at Tesla and reasons to be bearish on the electric vehicle maker.

Video Transcript

- Tesla CEO Elon Musk continues to make headlines surrounding the Twitter acquisition. Meanwhile, shares of Tesla, TSLA, yeah, they are moving lower on the day right now by about 1.2%. Questions have swirled around the tech titan's sales of Tesla shares to finance his dealmaking coupled with whether he might be too distracted to hit targets at Tesla. Craig Irwin, Roth Capital Partners senior research analyst, joins us now. Craig, you have a neutral rating and a $250 price target on Tesla. Now that we got that out of the way, help us answer some of these questions here. First and foremost, is Elon Musk too distracted to run both Twitter and Tesla? And what does that mean for Tesla?

CRAIG IRWIN: Just one point for regulatory reasons-- the split-adjusted price target is 85. The last printed note is pre-split. So is Elon Musk too distracted to run Tesla? Frankly, Tesla's his baby. This company is a great expression of his personality. And he has shown tremendous capability to manage many different things-- Neuralink, the Boring Company, SpaceX, and other outside ventures and the intellectual curiosity necessary to execute pretty well there.

So will it possibly take time away from Tesla? Yes. I think the question that probably needs to be asked is, will he be giving enough time to Twitter? And I'm not the best judge of that. I think he already has some pretty clear ideas on Twitter. And he does have a history with PayPal and the digital payments space, which I think is part of his vision on fixing that asset. So it doesn't bother me for Tesla. I have other reasons that I'm very bearish on the company. But I have tremendous respect for what they've done.

- Well, we'll get to those reasons in a second, Craig. But does it even matter if Elon is distracted? Who cares? And I mention that because we have EV tax credits in play that are probably going to be a big tailwind to Tesla. And then we have cars that people just really seem to be obsessed about.

CRAIG IRWIN: Yeah. I mean, they've done a tremendous job. They've basically made the automotive industry sexy again. The last time it was sexy was the 1950s. That was when kids would come out of the best universities in the world and say, oh my gosh, I want to work for a car company. Now those same kids are coming out and saying, I want to work on electric vehicles. I want to work on future drivetrain technologies. Elon Musk deserves a lot of that credit because it's his vision and his commitment that's allowed that to take place.

Does it really matter for Tesla so much? Not really. The flywheel is rolling. It's running. And they have very different issues to manage through over the next couple of years than what they've had to challenge through to date. And whether or not Elon Musk is the one that's the right person to make those decisions, we'll find out. I'm skeptical. I think there's some very challenging things ahead for this company. And if Musk is maybe reducing his intensity with the company, it might not be a bad thing.

- Craig, I know there's no imminent changes at the top of Tesla. But is there anybody else there who could run the thing besides him?

CRAIG IRWIN: Oh gosh. That's a tough question. I don't think so. I mean, I've talked to a lot of former Tesla executives. I know people that have turned down positions at Tesla that are leaders in their respective areas. It's a difficult company to work at because Elon Musk is an unreasonable person. Not in a bad way, but in a motivating way where he doesn't take no for an answer. He wants to learn what you got wrong, why you got it wrong, how are you going to do it different to achieve the goal. So it's a yes or no. A, yes, we got it, no, we didn't. A lot of people aren't well tooled to work in that environment. And there's a lot of burnout and a lot of turnover, as people like to talk about for Tesla, with heavy, heavy departures every year.

- Craig, I only got 30 seconds here. Colder months, they're coming soon. China and Tesla production. That's going to remain one of the main areas to continue to track. And can the company adequately mitigate any logistics impacts and factory shutdowns, as it doesn't seem China is going to change their zero-COVID policy anytime soon.

CRAIG IRWIN: Yeah. China's going to be tough for them. That's going to determine whether or not they make their numbers this year. 20,000 unit miss or 19,000 unit miss. It's China, right. I don't think this is what's the biggest issue for the company. The biggest issue is competition and alternative equities like Porsche and the upcoming Ford spin off. Large, well-established properties that are executing well. You have other examples of some of the SPAC IPOs that are actually showing success. Tesla has big problems on the horizon as far as this competitive environment. And they don't really have the technology lead that many people claim. Everybody has access to the same vendor base.

- Imagine that, competition for Tesla. Craig, thank you so much. Craig Irwin, Roth Capital Partners senior research analyst. Appreciate your time this morning. Thank you.