NEWS: Morgan Stanley has lowered their $TSLA price target to $320 (from $345).
Adam Jonas: “We believe Tesla has significant attributes to be valued as an Al beneficiary, but the company must see a stabilization in the negative earnings revisions within the auto business first.
We do not believe Tesla will get credit as an Al company as long as core auto earnings are being revised down. This process may take a few more quarters to see through, over which time our $100 bear case may be 'in play.'
Our thesis on Tesla is that it is both an auto stock + an energy, Al/robotics company. In fact, our valuation of the core auto business ($68/share) represents just 21% of our $320 price target. Negative developments in the global EV market very much matter to Tesla and should reasonably have a negative near-term impact on the price of the stock. At the same time, however, we believe investors should not ignore the continued developments of Tesla's other plays, many of which are auto-related (i.e. the recurring revenue opportunity from the Tesla fleet - embedded in our Tesla Network Services valuation) and other areas that we do not include within our $320 target but that the market may include (i.e. Optimus) which we expect to learn much more about during the 2024 Tesla Al day (date TBD).”
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