Tesla's 'Overvalued' Stock Being Falsely Driven By 'Tech-Oriented Investors,' Morgan Stanley Says

Tesla's 'Overvalued' Stock Being Falsely Driven By 'Tech-Oriented Investors,' Morgan Stanley Says

"Tech-oriented investors" are driving Tesla Inc.'s (TSLA) stock price higher without understanding the implications of running a car company, Morgan Stanley analysts said in a note Tuesday, as reported by Forbes.

The Tesla Analyst

Morgan Stanley's Adam Jones has maintained his previous rating of "underweight" on the company's stock with a price target of $650.

The Tesla Thesis

Jones noted that it is extremely unlikely for Tesla to justify its current stock price within the next decade.

Morgan Stanley forecasts Tesla to produce 2 million electric vehicle units annually for the next 10 years. At a stock price of $1,000, the automaker's stock is "discounting roughly 4 million units" by 2030, Jones said, according to Forbes.

False Comparison With Tech Giants

Tesla's stock is largely being driven by investors who draw a false comparison of the company with established technology companies and ignore the set of risks that come with running a car company, Jones suggested.

To be able to draw such a comparison, "one would have to consider (or ignore) significant inherent differences in Tesla's business model and capital intensity," the Morgan Stanley analyst wrote, according to Forbes.

"One must also take into account many of Tesla's business objectives face a degree of execution risk that may be significantly higher than many of the more proven/mature companies in this analysis."

What Else

GLJ Research founder Gordon Johnson similarly suggested on Benzinga's PreMarket Prep show earlier in the day that he was bearish on Tesla's stock.

TSLA Price Action

Tesla shares closed 0.75% higher at $1,001.78 on Tuesday. The shares traded nearly 0.5% lower in the after-hours session at $997.

Latest Ratings for TSLA

 
Date Firm Action From To
Jun 2020 Goldman Sachs Downgrades Buy Neutral
Jun 2020 Morgan Stanley Downgrades Equal-Weight Underweight
Jun 2020 Wedbush Maintains   Neutral

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.