AsianFin -- Tesla Inc. shares jumped 7.6% on Wednesday, bringing theirs two-day gains to around 11.7% after a plunge of 15.4% at the beginning of the week. Share extended rally after Morgan Stanley analyst Adam Jonas expressed upbeat on the electric vehicle (EV) heavyweight despite growing headwinds amid uncertainty of U.S. tariffs.
Credit：Tesla
Jonas reiterated his Overweight rating for Tesla and $430.00 price target in the next 12 months. The target suggested the analyst projected Tesla shares will rebound more than 86% from their Tuesday close. He also maintained Tesla as his top pick in U.S. autos and the bull base valuation of $800. That indicates an up to nearly 250% estimated rally of Tesla shares over the next year.
Jonas saw Tesla’s recent pullback a “buying opportunity for an embodied [artificial intelligence, or AI] compounder.” “We see Tesla as a long-term generational compounder within our coverage,” Jonas said in a note. He believed there are a few catalysts that could drive Tesla stocks higher, such as the robotaxi “unveil”, which Morgan Stanley expected between June and August, an AI/Humanoid Day showcasing Optimus developments, and the unsupervised version of Full Self-Driving (FSD) advanced driver assistant.
On an earnings call last month, Tesla CEO Elon Musk said the company is going to launch “unsupervised full self-driving as a paid service” in Austin, Texa, in June. That means Tesla plans to start its paid robotaxi service powered by FSD (Supervised) software in Texas in mid-2025. Musk also expected Tesla will have that software across U.S. next year, hoping that the company can provide it in most countries by the end of next year.
Jonas acknowledged weak sales as one of Tesla’s notable challenges these months. He pointed out sales in January plunged 45% year-over-year whereas overall sales in Europe were up 37%, and estimates of the latest weekly orders from February 24 to March 3 logged 11,000 to 13,000 units, a slowdown in China. Tesla also has to get through its souring brand sentiment and a de-grossing of the market. Jonas noted news reports that focus on Musk’s political activities rather than the company’s AI push is reshaping its reputation.
In spite of challenges, Morgan Stanley noted investor sentiment tends to shift with Tesla’s stock price. Its note said in December with the stock testing $500 per share, the prevailing sentiment was that Tesla is an AI ”winner” with untapped exposure to embodied AI expressions such as humanoid robotics. However, as the stock fell more than 50% from its peak in December, the focus of conversation among the bank’s investors is shifting to management distraction, brand degradation and lost auto sales.
Morgan Stanley anticipated volatility over the next 12 months as its bear case share price forecast is $200 compared with the $800 bull case.
Musk at an event at the White House on Wednesday said Tesla will double vehicle production in the United States within the next two years. Trump at that event said he would buy a Tesla car and hoped the purchase would help support Tesla sales.
The president said Musk was being unfairly targeted due to his work for the Trump administration, and he will label violence against Tesla dealerships “domestic terrorism.” “Elon Musk is putting it on the line to help our nation, and he’s doing a fantastic job,” Trump said. “He shouldn’t be punished for wanting to make the government better.”
Trump revealed on Tuesday morning he plans to buy a new Tesla car to stands for Musk. In a post on his social media Truth Social, Trump blamed “the Radical Left Lunatics” for their attempts to “illegally and conclusively boycott Tesla”, which he touted as “Musk’s ‘baby’.” “Elon Musk is “putting it on the line” in order to help our Nation, and he is doing a FANTASTIC JOB!” Trump wrote.
