Musk Tweet Reflects 'Genuine Concern' Over Q2 Declines, Says Morgan Stanley
It is not often that a CEO says their stock price is too high, but that is what Elon Musk tweeted about Tesla shares this morning, Morgan Stanley analyst Adam Jonas tells investors in a research note.
While the analyst believes the long-term strength of the company is intact, he thinks the sentiment shared by Musk "is out of genuine concern for the severity of the decline in profits and cash flow" during Q2. Given the decline in production at the Fremont plant during the lockdown, which accounts for 70% to 80% of the company's run rate global production cap, Tesla's Q2 revenues could be down as much as 80% year-over-year, Jonas tells investors in a research note. Further, negative payables could drive the company's cash burn to as much as $4B or more in the quarter, adds the analyst.
Jonas interprets Musk's tweet as a caution not just to investors but also to lawmakers. The analyst keeps an Equal Weight rating on Tesla with a $440 price target. The stock in afternoon trading is down 10%, or $80.23, to $701.65.
Disclosure: None.