Tesla (TSLA) shares moved higher Wednesday after Elon Musk said he planned to carry on as CEO of the clean-energy-car maker, adding that the time he will devote to Twitter under its new leadership will be "relatively small" compared to the past six months.
Speaking during a question-and-answer session with investors at Tesla's annual meeting late Tuesday, Musk said he had no plans to step down as CEO following his decision to relinquish the same role at Twitter, the social-media platform he bought for $44 billion last year.
"There was a short-term distraction because I had to do major open-heart surgery on Twitter to ensure the company's survival," Musk said. He noted that his responsibilities would diminish when NBCUniversal ad executive Linda Yaccarino takes over as CEO next month.
Speculation that Musk might step down as Tesla CEO gathered pace last year following testimony from James Murdoch during a lawsuit brought by a Tesla shareholder over Musk's $56 billion pay deal.
Murdoch, the son of media billionaire Rupert Murdoch, told the Delaware Chancery Court that over "the last few months" Musk had decided who may replace him as CEO were he to leave, or retire from day-to-day operations.
Tesla 'Not Immune' to Global Economy: Musk
Musk added that he sees the Tesla Model Y becoming the top-selling car in the world as early as this year, but cautioned that the carmaker is "not immune to the global economic environment," which he expects to remain difficult "for at least the next 12 months."
Musk also said Tesla would begin experimenting with advertising over the coming months, a move Wedbush analyst Dan Ives said could be a "major positive" for the stock.
“I believe in listening to shareholders and I actually was surprised by the level of enthusiasm for advertising," Musk told CNBC's David Faber during an interview that followed the Tesla shareholders meeting.
"It’s worth a try and we’ll see how effective it is, (but) bear in mind that, you know, I only just agreed to it. So I don’t have a fully formed strategy."
At last check Tesla shares were marked 4.3% higher in afternoon trading Wednesday to change hands at $173.66, a move that would extend the stock's year-to-date gain to around 40%.
Musk warned investors late last month that Tesla would likely focus on growing sales volumes and extending its lead in key markets over improving profitability. He justified that as a necessary step in its plan to generate recurring revenue, and longer-term earnings growth, from automated-vehicle sales over the coming years.
Tesla: Thinner Margins, Lower Earnings
Tesla posted its thinnest quarterly profit margins in more than two years, linked in part to its relentless 2023 price cuts, with earnings falling 21% from a year earlier to 85 cents a share on revenue of $23.33 billion.
Adjusted automotive margins were 18.3%, Tesla said, a sharp narrowing from the 26.8% figure from last year's first quarter and the 22.2% tally recorded over the final three months of 2022 following a series of price cuts in its biggest global markets.
"We’re taking a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin," Musk told investors on a conference call on April 19. "However we expect our vehicles over time will be able to generate significant profit through autonomy."
"So we do believe we’re laying the groundwork here and then it’s better to ship a large number of cars at a lower margin and subsequently harvest that margin in the future as we perfect autonomy," he added. "This is an extremely important point."
Tesla posted a record first-quarter delivery total of 422,875 new vehicles, a 36% increase from the year-earlier period, but that tally missed Street forecasts as production outpaced demand. Production rose 45% to 440,808 vehicles as supply-chain disruptions and covid-related closures at its Shanghai factory faded.
The pace is firmly shy of the rate needed to meet Tesla's own target of 1.8 million deliveries over the whole of 2023, and Musk's suggestion that "if it's a smooth year ... without some big supply chain interruption or massive problem" deliveries could reach 2 million.
