'Tesla is bigger than Musk': Jefferies says investors shouldn't be shaken by Twitter 'distraction'

Published Wed, Apr 20 20228:11 AM EDTUpdated Wed, Apr 20 20229:34 AM EDT

Tesla investors shouldn't be deterred by CEO Elon Musk's bid to buy Twitter , according to Jefferies autos analyst Philippe Houchois. Calling the takeover talk a "distraction," Houchois said that although Musk is a "big driving force at Tesla," the company has a "very strong team." "Tesla is bigger than Musk," Houchois told CNBC's "Street Signs Europe" Wednesday. "Tesla will continue to execute its plans even if Elon Musk allocates a bit more of his time to non-automotive activities." Musk announced his offer to acquire Twitter for $43 billion last week. The tech billionaire is one of the platform's most popular users, and thinks it needs overhauling to ensure users' right to free speech. Twitter has attempted to counter a possible hostile takeover from Musk with a " poison pill ," which allows existing shareholders to purchase additional shares at a discount if one investor acquires at least 15% of the company without board approval. The aim is to dilute a hostile investor's holdings. Musk's proposal to buy Twitter has already proven controversial, with critics concerned such an acquisition would give the world's richest man too much sway over one of the most popular online discussion sites. The Tesla and SpaceX boss has hinted he may launch a tender offer for Twitter shares if the board resists. On Tuesday, Musk tweeted a cryptic message that read: "_______ is the Night." Houchois said any deal should have little impact on Tesla's stock price. Tesla is set to report first-quarter earnings after the bell Wednesday. "I'm a Tesla analyst. I'm not an Elon Musk analyst," he said. "We've seen the risk of distractions in the past. But we've also seen Tesla go from strength to strength." Instead, shareholders should focus on Shanghai's Covid-19 shutdown and what it means for Tesla's China production activities, according to Houchois. Tesla is said to have resumed production at its Shanghai plant in a so-called "close-loop" system, with workers reportedly being asked to sleep on the factory floor. "What is difficult to gauge now is how much of a normalization we're going to see as staff stay at the plant, and how much they're able to maintain productivity that one might expect at that factory," Houchois said. Jefferies has a "buy" rating on Tesla stock and a price target of $1,250, up about 22% from where it was most recently trading. Houchois said he expects the company to weather rising inflation well thanks to recent price hikes . "They've sized their price increases to more than offset the material cost inflation," he said. Earlier this month, Musk said Tesla may have to get into the lithium mining and refining business as prices of the material — a key component in manufacturing batteries — have gotten to "insane" levels.

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Tesla investors shouldn't be deterred by CEO Elon Musk's bid to buy Twitter, according to Jefferies autos analyst Philippe Houchois.