Morgan Stanley Pours Cold Water On Tesla Rally, Calls Share Price “Excessive”

When Morgan Stanley’s Adam Jonas is the one coming out and pouring cold water a Tesla rally, you know things must really be getting out of hand.

But such was the case Friday morning when Jonas called the recent move higher in Tesla shares “excessive” given the company’s earnings and demand headwinds this year. 

Jonas wrote in his note that the stock is discounting volume of roughly 4 million units by 2030 by pricing the stock at nearly $750. Jonas’ price target of $440 is based on slightly more than 2 million units, he noted.

Jonas was quick to point out that investors view Tesla’s valuation as reasonable because they are comparing it to megacap technology stocks. He warned that investors need to consider significant inherent differences between Tesla’s business model and the capital intensive nature of the business. 

He concluded his note by reminding readers that Tesla faces execution risk to many of its business objectives that could be higher than many mature companies. 

He didn’t, surprisingly, mention the Elon Musk/Covid-19 public relations sh*tshow that has been unfolding over the last couple of weeks. For example, yesterday we pointed out that Musk reportedly had only made donations to hospitals fighting the virus if they would thank him publicly on social media.

Jonas appears to be suffering from multiple personality disorder, as well. Back in February we noted that he had revised his bull case target on Tesla to $1200 per share – one month after setting it at $650. 

Morgan Stanley faces off against Goldman Sachs, who upgraded Tesla just days ago on April 14 with a $864 price target. In that upgrade, Goldman said: “We are positive on Tesla because we believe that the company has a significant product lead in EVs, which is a market where we expect long-term secular growth.”

Goldman analyst Mark Delaney added:  “We also note that Tesla’s EBITDA margin in 2021E screens relatively well vs. these peers.”

Let’s see how that screen looks when the 2021 actual numbers start rolling in. In the interim, we think we know who the lead bookrunner for Tesla’s next capital raise will be.