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Tesla (TSLA) and now Twitter CEO Elon Musk is the smartest person in the room. Or he’s imploding, having bitten off more than even he can chew.
In a minute, The Juice relays some Tesla-related potentially bad news for Musk that’s flying under the radar, probably because there’s so much other Twitter-related tea spilling this week.
Particularly, the thing we’ll get to first: Elon’s feud with Apple (AAPL) CEO Tim Cook.
Apple spent nearly $50 million advertising on Twitter in Q1. According to Musk, the company has since pulled most of its dollars.
Musk says it’s an assault on free speech. That type of hyperbole has to make even the most ardent Elon fan laugh.
The Juice thinks it’s a case of:
Then, there’s the 30%.
The cut Apple takes for its App Store’s in-app purchases, which include Twitter subscriptions.
Clearly, Musk wants to reignite the public debate Epic Games jump-started when it sued Apple in 2020 – and lost the next year – over the same issue. The end goal is to make Apple look like the bad guy and pressure the company into reducing its App Store commission.
The Juice’s take: Apple operates from a position of strength. Right now, Elon Musk doesn’t. And Twitter certainly doesn’t.
The public either loves or hates Musk. With Cook, people either love him or are indifferent. He’s not a polarizing figure.
Musk will have a tough time driving public opinion sour on Apple, because nobody cares at all if Apple doesn’t advertise on Twitter or all that much if Apple takes a 30% commission in the App Store.
Plus, iPhone users tend to love their iPhones. Many Twitter users aren’t all that jazzed about the platform these days.
Plus, plus! Musk might have even more to worry about – at Tesla. So why bark up Tim Cook’s I come off as a nice guy tree?
Elon, Maybe Don’t Pick a Fight With Apple
Tesla’s performance against the four stocks that follow it in terms of search interest among investors in our proprietary sentiment indicator, Trackstar, is not hyperbole. Always #1 among automakers and usually #1 among all stocks, interest in TSLA surged nearly 31% over the last week.
Maybe investors see opportunity in the lagging stock price.
Source: Google Finance
While we don’t necessarily disagree, it’s always smart to take a second look.
A couple weeks ago, The Juice relayed numbers about the EV market that signal Tesla’s dominance.
Tesla makes three of the top four EV models. And while other brands are gaining ground, they didn’t seem to be gaining that much ground. Plus, you can attribute much of the ground they’ve gained to Tesla making EVs a thing.
But a new forward-looking analysis from S&P Global Mobility doesn’t bode great for Tesla.
Source: S&P Global Mobility
While Tesla dominates today (65% market share), it doesn’t dominate as much as it did in 2020 (79%). By 2025, S&P expects Tesla to not dominate, dropping to less than 20% market share.
Of course, the million-dollar question if the overall EV market will expand enough so that 20% market share in 2025 is basically the same as or better than 65% market share in 2022. Only time will tell.
S&P thinks affordability is Tesla’s problem.
While a base Model 3 comes in at under $50,000 with shipping, it costs a lot more with customizations. Just upgrading to a performance package brings the cost above $56,000. Add blue paint and Autopilot and you’re looking at $71,440 total when we checked or $879 a month on a 36-month lease with a paltry 10,000-mile allowance and $4,500 down.
S&P’s analysis hints at something worrying: Honda (HMC) and Toyota (TM) have yet to enter the EV market in full force. When they do, millions of people who drive their already fuel-efficient cars will switch to their moderately priced EVs, not more expensive Teslas.
The Bottom Line: In the tech and finance worlds, going after Apple is akin to going after Canada or Switzerland.
As angry as one might get over the 30% App Store commission, it’s not nearly as angry as one gets over the antics of the 1%. Or, in Elon’s case, the 0.0001%.
In other words, now’s not the time for Elon Musk to pick fights, especially with a company more iconic than any of the ones he owns. Especially with Twitter imploding and Tesla stock cratering amid increasing competition in the EV marketplace.
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