Despite recent turmoil and concern over Elon Musk’s priorities, Morgan Stanley remains bullish on Tesla stock. In a client note, longtime Tesla advocate Adam Jonas cut his price target on the stock to $250 from $330, his new forecast calls for a 122% upside from Wednesday’s close. Tesla will extend its lead over electric-vehicle competitors, and the Inflation Reduction Act will benefit the company. Those are the reason for Jonas’ optimistic outlook.
When addressing Tesla’s 65% drop in 2022, Jonas avoided blaming CEO Elon Musk’s obsession with Twitter, something that a growing chorus of critics has pointed out as a major loss driver. He attributed it to supply outpacing demand for the first time since the COVID-19 pandemic and assorted “technical factors.” “The last two years of demand exceeding supply will be substantially inverted to supply exceeding demand,” Jonas wrote. “Within this environment, we believe players that are self-funded (non-reliant on external capital funding) with demonstrated scale and cost leadership throughout the value chain (from manufacturing to up-stream material supply) can be relative winners.” He continued: “Between a worsening macro backdrop, record-high unfavorability, and increasing competition, there are hurdles to overcome. Yet we do believe that in the face of all these pressures, Tesla will widen its lead in the EV race, as it leverages its cost and scale advantages to further itself from the competition.”