The recent past for Tesla (NASDAQ: TSLA) has been a bit shaky. The unveiling of its new Cybertruck has been met with widescale derision yet plenty of reports of pre-orders. In fact, just a few weeks prior, short-sellers who decided they'd tackle Tesla lost their collective shirts to the tune of $1.4 billion. Now, Adam Jonas, a Morgan Stanley analyst, has offered up some fresh perspective on the company that says wild ups or downs may be in its imminent future.
That's One Big Spread
As of this writing, Tesla shares are trading at 335.73, which is up substantially from the previous day's close of 330.37. That's what makes Morgan Stanley's projections look so downright bonkers by comparison. It's holding its equal-weight rating, and it's also keeping its $250 price target, but has adjusted the bull case upward, and by a decent margin.
The bull case for Tesla started at $440 per share, but has now been revised upward to $500 per share. In perhaps an even more disturbing development, the bear case for Tesla, reports note, is now at $10 per share.
Driving the increase in the bull case number is a combination of factors, including, surprisingly, the new Cybertruck as well as a brighter outlook on the Chinese front.
Not Bullish, but Possibly Bullish
Jonas noted that Morgan Stanley was not actively bullish on Tesla, especially in any long-term outlook. One of the biggest risks to Tesla's fortunes, Jonas noted, was that the market might start looking at Tesla “...more like a traditional auto OEM (original equipment manufacturer).”
However, even Jonas acknowledged the possibility of “...a potential surge in sentiment...” to come in the first half of 2020. Jonas had doubts as to how long that particular surge could be held out, and a surge in sentiment wouldn't likely stick around any length of time.
Tesla's Strange Future to Come
No matter how you slice it, Tesla's world is a puzzling one these days, which probably lends some explanation of why the difference between bull and bear cases at Morgan Stanley is somewhere between “double our price target” and “almost worthless.”
Not so long ago, we got a look at Tesla stock and found that Tesla has something of an early-mover advantage on its side. It's got the rest of the fourth quarter, our earlier examination found, to really make something of itself in a sales push. However, Tesla's focus on sporty form factors—Cybertruck aside—has left it on a bad footing in states with heavy winters, and its grasp on the brass tacks of auto manufacture are somewhat lacking.
Essentially, as Adam Jonas pointed out, a Tesla without the gee-whiz factor is going to have a very tough time getting along as a standard car factory. While the impact of its “gigafactories” is starting to show up in Tesla's financials by some reports, that's still going to leave it short against standard car companies. The incoming electric vehicles from places like Ford aren't going to help Tesla's picture any, either; Ford will have a halo effect of decades of reliability and name recognition to back its play.
Is Tesla Just a “Someday” Stock After All?
Way back in July, we referred to Tesla as a “someday stock”. Someday it will be profitable and do well for its investors. Yet there was no denying that that quarter alone had seen the delivery of 95,200 vehicles, which beat not only consensus analysis but also Tesla's own estimates. With another 250,000 preorders said to be in place for the Cybertruck, and interest coming in from all over the world—including both Dubai and San Luis Potosi, both of which are planning to put police in them—maybe Tesla's someday is sooner than anyone saw coming.
The future is Tesla's greatest strength; the mystique of the future has done great things for Tesla so far, and it may well continue to do so, assuming it can back up that mystique with orders and cost savings. Tesla can never allow itself to be seen as “just another car company”. If that ever happens, Tesla's greatest advantages go out the door and it's left to compete, flat-footed, against a range of other options.