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Tesla Plunges After Morgan Stanley Cuts To Sell, California Registrations Plummet 47%

January 16, 2020

It seemed like it was just yesterday that Morgan Stanley was enlightening us with their $10 to $500 price target range for Tesla. Yet here we stand, just weeks later and on the back end of a massive Tesla short squeeze that has seen shares run from the mid $300 level to as high as $537 in just a month. And at this nearly $100 billion valuation, which almost made Tesla bigger than the world's biggest autocompany, Volkswagen, even MS' Adam Jonas has seen enough.

 

In a note on Thursday morning, the Morgan Stanley auto analyst downgraded Tesla to "Sell" based on valuation, unfavorable risk-reward and risks to the long-term Chinese business that may not be "fully appreciated by the market". Ironically, he hiked his price target from $250 to $360, and in the new note, he updated his $490 spread "valuation cone" to show his new target of $360. The spread of potential valuations has widened from a laughable $490 to an outright ridiculous $535 ($115-$650). Which, probably, is why analysts get paid the big bucks.

 

Jonas commented in his note: "Near-term momentum and sentiment around the stock is admittedly very strong, but we ultimately question the sustainability of the momentum. We believe the current share price discounts a fully ramped up China, Berlin and Model Y."

 

Jonas says that at $520, Tesla stock is "very close to pricing in our bull case assumptions". He claims that "investors will be presented with more attractive opportunities to own the stock in the future".

 

FULL REPORT

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