Morgan Stanley analyst Adam Jonas has reiterated Tesla as their top pick in U.S. Autos, citing the company's efforts to mitigate risks in its core auto business while expanding into new areas such as energy, computing infrastructure, robotics, and other forms of embodied AI.
In a recently released note, Jonas highlighted Tesla's strategic moves to reduce downside risk in its automotive segment, which Morgan Stanley values at $59 per share. However, the analyst emphasized the growing importance of Tesla's ventures beyond traditional car manufacturing, signaling a shift in how the company is being perceived by Wall Street.
Despite being nearly 50% off its all-time highs and underperforming compared to other mega-cap tech stocks, Morgan Stanley remains optimistic about Tesla's prospects. the firm acknowledges the challenges in the global EV market but praises Tesla's cost control measures as crucial for investors to appreciate the company's expanding role in the AI sector.
Serial entrepreneur Larry Goldberg, interviewed in the transcript, offered additional insights into Tesla's position. He noted that while traditional analysts might value Tesla primarily on its auto business, the venture capital community sees Tesla as a group of startups backed by a successful underlying auto company. This perspective values Tesla's emergent ventures in robotics, full self-driving, and AI alongside its more mature automotive division.
The discussion touched on Tesla's remarkable production efficiency, with Goldberg highlighting that Tesla's productivity in China significantly outpaces that of European factories. This efficiency is expected to play a crucial role as Tesla plans to introduce new, more affordable models next year, which could have a substantial impact on the market.
Both Morgan Stanley and Goldberg acknowledged the current pressure on EV margins, partly due to increased competition from hybrid vehicles and aggressive pricing from Chinese manufacturers. However, Goldberg predicts a potential rebound for EVs against hybrids in the coming years, suggesting that the current hybrid growth might be "fool's gold."
The transcript discussed the upcoming "Robotaxi Day" event in Hollywood, scheduled for October 10th. While Morgan Stanley urges clients to keep near-term expectations in check, there's anticipation around potential demonstrations of fully autonomous vehicles. The choice of venue at Warner brothers studios has sparked speculation about a larger-scale event with possible celebrity and media attendance.
Morgan Stanley's analysis of Tesla's profitability in its core auto business sparked some debate. The firm's calculations, which back out various revenue streams, suggest that the core auto operations might be loss-making this year. However, Goldberg disagreed with this methodology, arguing for a product-by-product approach to analyzing Tesla's profitability.
As Tesla continues to balance its traditional auto manufacturing with investments in autonomous driving and other technologies, the company faces critical decisions about resource allocation. The upcoming Robotaxi event may offer more clarity on Tesla's direction, potentially showcasing not just autonomous vehicles but also other innovations that could shape the company's future.
In conclusion, while Tesla faces challenges in maintaining margins and market share in an increasingly competitive EV landscape, its diversification into AI, robotics, and energy solutions continues to intrigue analysts and investors alike. The company's ability to navigate these complex waters will likely determine its position as a leader in both the automotive and tech sectors in the years to come.
Morgan Stanley Reaffirms Tesla as top Pick Amid Evolving business model
Morgan Stanley analyst Adam Jonas has reiterated Tesla as their top pick in U.S. Autos, citing the company's efforts to mitigate risks in its core auto business while expanding into new areas such as energy, computing infrastructure, robotics, and other forms of embodied AI.
In a recently released note, Jonas highlighted Tesla's strategic moves to reduce downside risk in its automotive segment, which Morgan Stanley values at $59 per share. However, the analyst emphasized the growing importance of Tesla's ventures beyond traditional car manufacturing, signaling a shift in how the company is being perceived by Wall Street.
Tesla's Stock Performance and Market Position
Despite being nearly 50% off its all-time highs and underperforming compared to other mega-cap tech stocks, Morgan Stanley remains optimistic about Tesla's prospects. the firm acknowledges the challenges in the global EV market but praises Tesla's cost control measures as crucial for investors to appreciate the company's expanding role in the AI sector.
Serial entrepreneur Larry Goldberg, interviewed in the transcript, offered additional insights into Tesla's position. He noted that while traditional analysts might value Tesla primarily on its auto business, the venture capital community sees Tesla as a group of startups backed by a successful underlying auto company. This perspective values Tesla's emergent ventures in robotics, full self-driving, and AI alongside its more mature automotive division.
Production Efficiency and Future Models
The discussion touched on Tesla's remarkable production efficiency, with Goldberg highlighting that Tesla's productivity in China significantly outpaces that of European factories. This efficiency is expected to play a crucial role as Tesla plans to introduce new, more affordable models next year, which could have a substantial impact on the market.
Challenges in EV Margins and Market Competition
Both Morgan Stanley and Goldberg acknowledged the current pressure on EV margins, partly due to increased competition from hybrid vehicles and aggressive pricing from Chinese manufacturers. However, Goldberg predicts a potential rebound for EVs against hybrids in the coming years, suggesting that the current hybrid growth might be "fool's gold."
Autonomous Driving and the Robotaxi Event
The transcript discussed the upcoming "Robotaxi Day" event in Hollywood, scheduled for October 10th. While Morgan Stanley urges clients to keep near-term expectations in check, there's anticipation around potential demonstrations of fully autonomous vehicles. The choice of venue at Warner brothers studios has sparked speculation about a larger-scale event with possible celebrity and media attendance.
Tesla's Financial Performance
Morgan Stanley's analysis of Tesla's profitability in its core auto business sparked some debate. The firm's calculations, which back out various revenue streams, suggest that the core auto operations might be loss-making this year. However, Goldberg disagreed with this methodology, arguing for a product-by-product approach to analyzing Tesla's profitability.
Looking Ahead
As Tesla continues to balance its traditional auto manufacturing with investments in autonomous driving and other technologies, the company faces critical decisions about resource allocation. The upcoming Robotaxi event may offer more clarity on Tesla's direction, potentially showcasing not just autonomous vehicles but also other innovations that could shape the company's future.
In conclusion, while Tesla faces challenges in maintaining margins and market share in an increasingly competitive EV landscape, its diversification into AI, robotics, and energy solutions continues to intrigue analysts and investors alike. The company's ability to navigate these complex waters will likely determine its position as a leader in both the automotive and tech sectors in the years to come.