Amidst swirling pessimism engulfing Tesla’s stock, Morgan Stanley auto analyst Adam Jonas is resolute, new $TSLA note: TSLA Sentiment Check: Can Bearish be Bullish? – the electric vehicle juggernaut represents a bargain contrarians can’t afford to ignore. In his latest research note, Jonas highlights overwhelmingly bearish investor sentiment suggesting the share price still hasn’t bottomed out. But the Wall Street firm remains convicted in its surprising “overweight” rating and $345 price target.
The numbers speak for themselves regarding prevailing negative vibes. A recent Morgan Stanley survey found 60% of respondents expect Tesla shares to underperform the S&P 500 through year-end, with bearish takes outnumbering bulls by over 2-to-1. An eye-watering 75% believe the stock has further to fall, with over a quarter braced for sub-$100 levels (50% below current prices).
Bearish on Tesla’s AI Exposure?
The pessimism runs deeper than near-term trading views too. Fewer than 1 in 4 respondents view Tesla as an effective investment vehicle for riding artificial intelligence’s generative tailwinds. This skepticism tracks with Jonas’ read that CEO Elon Musk aims to divorce Tesla’s narrative from the AI hype cycle in 2024, refocusing on deteriorating EV demand realities.
So amid such relentless gloom, why does Jonas’ team harbor such atypical optimism? Look no further than Morgan Stanley’s expanded interpretation of Tesla’s very identity.
“Our thesis is Tesla is both an auto stock and an energy/AI/robotics company,” Jonas declares. Under this multi-dimensional framing, the firm’s $75 per share valuation for Tesla’s legacy car business represents just 22% of that lofty $345 target.
The underloved bull case rests heavily on Tesla’s recurring revenue streams and ambitious, auto-adjacent ventures. From data services monetizing the company’s active vehicle fleet to the tantalizing potential of robotics breakthroughs like Optimus, Jonas sees a wellspring of upside nobody’s pricing in – particularly the artificial intelligence optionality so many respondents dismiss.
Ultimately, Jonas positions Morgan Stanley’s contrarian call as a hedge against near-term auto industry choppiness unjustly mauling shares of a vibrant, diversifying technology powerhouse. With the Street seemingly abandoning all objectivity, joining Tesla’s perpetual cycle of hype/disillusionment represents an asymmetric opportunity.
Risky? Sure. But if Jonas proves prescient that the EV leader’s trans-formative peripheral bets remain tragically underappreciated, today’s bearish rabble will merely set the stage for Tesla’s next act. If their bull case converts into reality, the bargain could be historic.v