Investor's Corner
Tesla has Morgan Stanley taking bullish and bearish stances in China
Tesla’s (NASDAQ: TSLA) automotive operation in China has Morgan Stanley analysts taking bullish and bearish stances. A new note from the Wall Street firms indicates short-term growth and possible electric vehicle sector domination. However, long-term perspectives align with past Morgan Stanley outlooks that hint toward Tesla’s decline and subsequent inferiority in the Chinese market.
Following the news of Tesla vehicles being banned in military or government facilities late last week, Morgan Stanley released a new note that revealed several important metrics that could be affected by the ban. The firm’s short-term outlook seems bullish, especially as it highlights the advantages Tesla holds financially in China and its popularity with Chinese car buyers, who have flocked to the company’s all-electric vehicles since first being delivered in early 2020.
Tesla and China: 7 Thoughts | Morgan Stanley$TSLA pic.twitter.com/YxuJWFWuWK
— David Tayar (@davidtayar5) March 22, 2021
“We estimate well over 50 to 60% of Tesla’s global profitability is currently derived from China,” Morgan Stanley analysts revealed as the first of seven points in the note. Giga Shanghai, Tesla’s Chinese production facility, is currently producing 450,000 vehicles annually, the company said in its most recent Shareholder Deck. While some of those vehicles are being exported to Europe to help supplement the Fremont factory’s production, most of them stay in China to help feed the overwhelming demand that has been sustained through consumer loyalty. Tesla has done a great job of expediting production timeframes to keep up with healthy demand. It surely is helping fuel the company’s profitability, which has spanned through the six previous quarters.
Additionally, Morgan Stanley stated that it “believes automobiles will transform into a transportation utility, where companies will fight for a winner-take-most network at a regional/national level.”
With Tesla dominating 2020 EV sales in China, mostly in part to the Model 3 that held 11% of the total market share, the company sits in a prime position to dominate the market for years to come. While the Wuling HongGuang Mini EV has outsold the Model 3 for several months, it isn’t easy to compare the two vehicles. Price, range, performance, and luxury are all incomparable because the Model 3 dominates nearly every category except for the price. While the HongGuang Mini EV is more affordable because it is only $4,500, it is undoubtedly a budget vehicle. It has just over 100 miles of range, and standard features, like air conditioning, will run consumers an extra $500.
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While some of Morgan Stanley’s new note gave off bullish tones, several points came off bearish, especially one point that seemed to align with analyst Adam Jonas’ prediction that Tesla would not sell a car in China by 2030.
“We forecast Tesla China volume peaking in the year 2027 at just under 900k units and declining from there,” the note said. “Beyond 2030, our implied growth rate and terminal valuation of Tesla’s China business includes a significantly diminished contribution from China.”
In October 2020, Jonas said that Tesla’s raging success in China would come to an end. “We have China sales peaking [in the] middle of the decade and then going down…and then eventually nothing after 2030,” Jonas said to Yahoo Finance. Interestingly, Jonas’s prediction was mostly based on the fact that the U.S. government would likely not want Chinese autonomous vehicles traveling around the country. This situation is extremely similar to the ban China put on Tesla vehicles entering military and government-owned facilities last week.
Tesla to sell zero cars in China by 2030, Morgan Stanley’s Jonas says
“Can you imagine a Chinese internet of cars autonomous network operating in the streets of Boston in 10 years? Of course not. Wake up. It’s not happening,” Jonas added. “And so this idea that the Chinese aren’t allowed to use AI network machine learning data privacy networks from the state, but it’s okay for us to do [it] there, is just a fallacy in our opinion.”
It seems like a longshot that Tesla will simply dissolve into nothing in China by 2030. However, Jonas believes that rising tensions between the U.S. and China could point toward privacy taking priority, and autonomous vehicles will raise suspicion that they could be used as spy devices. If this were to happen in 9 years, Tesla would lose a considerable chunk of its profitability because of China’s influence on the company’s financials. However, this remains to be seen, and many Tesla bulls believe that the company holds a long future in China that could spell trouble for competing automakers for years to come.
Disclosure: Joey Klender is a TSLA Shareholder.
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Elon Musk
SpaceX Starship just nailed something it’s never done before
SpaceX’s Starship flew successfully Friday, landing both stages and deploying its first Starlink V3 satellites.
Starship’s thirteenth test flight delivered exactly what SpaceX needed with a clean liftoff, two successful stage recoveries, and the first real payload the vehicle has ever carried to space. Booster 20 and Ship 40 lifted off at 5:51 p.m. CT from Starbase, and by the time the mission wrapped roughly an hour later, both halves of the rocket had done exactly what they were supposed to do.
Booster 20 separated from Ship 40 a few minutes into the flight and stuck a controlled splashdown in the Gulf of Mexico about six minutes after liftoff. That is a meaningful turnaround from Flight 12 in May, when the booster lost several engines during its boostback burn before a hard water landing attempt.
Starship as seen from Starlink satellites pic.twitter.com/e2hvfmnewh
— Elon Musk (@elonmusk) July 25, 2026
Starship 40’s performance was arguably the bigger win. The vehicle deployed the first 20 operational Starlink V3 satellites Starship has ever carried, then flew a suborbital arc to a landing in the Indian Ocean that SpaceX commentator Dan Huot called the company’s softest splashdown yet. “This is a dream scenario for this team that’s trying to get this heat shield data,” Huot said on the live broadcast, according to Space.com’s live coverage. “I’m a little over the moon right now. Wow. Lucky number 13.”
Unlike the mass simulators SpaceX flew on Flight 12, these were production Starlink V3 satellites, meant to extend solar arrays and antennas and attempt to link with the broader constellation before reentering minutes later. Getting real hardware through a full deploy sequence on only the second flight of the V3 generation keeps Starship on schedule for the payload work NASA is counting on for future Artemis lunar landings.
What an awesome launch, really seems like everything went super well and it was all incredibly smooth.
SpaceX is awesome. Very interested to see how the market will respond on Monday pic.twitter.com/KSHmyBfV55
— TESLARATI (@Teslarati) July 25, 2026
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— TESLARATI (@Teslarati) July 25, 2026
The flight also arrives at a moment when SpaceX needed a win. SPCX has traded below its $135 IPO price since mid-July, as Teslarati reported when the mission slipped to Friday, and short interest has climbed to roughly a third of the tradable float. A clean flight will not fix a balance sheet, but it does answer the one question SpaceX absolutely needed answered this week: whether the fixes made after the July 16 abort would hold up under real flight conditions. They did, on both stages, on the first try after the redesign.
SpaceX has not set a target date for Flight 14, though the company has said it wants to push toward an orbital attempt on the next mission. After Friday, that goal looks a lot more within reach.
Tesla short sellers won big following the company’s massive fall on Wall Street after it reported subpar Earnings on Wednesday.
Tesla short sellers collected about $4.12 billion in single-day profits on Thursday, according to Bloomberg. Shares fell as much as 15 percent during Thursday’s session. It closed as one of the worst days for Tesla on Wall Street in the past three years.
Investors sold off the stock after Tesla said it would aggressively direct its spending toward AI and its Optimus robot project. The company had record revenues, which were driven by one of the strongest quarters in terms of vehicle deliveries in company history.
However, it missed EPS estimates by reporting just $0.33, a far cry from the $0.53 analysts expected.
S3 Partners reported that about 3 percent of Tesla’s outstanding stock is sold short. Managing Director at S3, Ihor Dusaniwsky, provided the short seller’s potential profit, as well as another figure: shorts have likely had paper gains of $8.92 billion this year, as Tesla shares are down 30 percent in 2026.
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Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Tesla has burned short sellers many times in the past, but the company’s latest Earnings Call was a chance for those skeptics to taste some payback. Although the company gave some very transparent information regarding future projects, the rollout of Robotaxi, Optimus, and Semi, many investors took their profits on Thursday.
Notable short sellers like Michael Burry have been transparent about their skepticism around Tesla shares. Burry just revealed three weeks ago that he had opened up a new short on the stock, stating he shorted Tesla shares at $416.22. “Happy it jumped back to this level,” he said in a blog post.
At the time of publication, Tesla shares were down about 3 percent and the stock was trading at $309.92.
Tesla stock (NASDAQ: TSLA) endured one of its sharpest single-day declines in years on July 23, tumbling approximately 14.5 percent and closing near $320 after opening the session around $374. The drop erased more than $140 billion in market value amid heavy trading volume and left the shares at multi-week lows.
The sell-off followed the company’s second-quarter 2026 results, released the previous evening. Tesla reported record revenue of $28.2 billion, up 26 percent year over year, driven by a Q2-record 480,126 vehicle deliveries. Energy storage deployments also rose strongly.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Yet profitability disappointed sharply. Operating income fell 57 percent to $398 million, compressing the operating margin to just 1.4 percent. Non-GAAP earnings per share came in at $0.33, well below the roughly $0.53 analysts had expected. Free cash flow turned negative by $1.1 billion as capital expenditures surged 142 percent to $5.8 billion, largely tied to accelerated spending on artificial intelligence, robotics, and autonomous systems.
The losses on capex were expected, as Tesla said it would be spending heavily in 2026.
Investors also reacted to lingering uncertainty surrounding key product timelines. During the Earnings Call, management reiterated ambitions for Robotaxi deployment and the Optimus humanoid robot, but offered limited new concrete milestones, renewing questions about execution pace that have long accompanied Tesla’s ambitious roadmap.
The magnitude of the decline places it among Tesla’s more severe one-day percentage losses since its 2010 initial public offering. Historically, the two largest single-day drops (split-adjusted) remain September 8, 2020, when shares fell 21.1 percent amid broader market volatility and valuation concerns, and January 13, 2012, with a 19.3 percent plunge during the company’s early growth struggles.
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Other notable declines include an 18.6 percent drop on March 16, 2020, at the onset of pandemic-related market turmoil. Thursday’s move ranks roughly ninth on the all-time list but stands out as the steepest in more than a year.
Despite the short-term pain, Tesla’s long-term trajectory has repeatedly recovered from such volatility. The latest results underscore both the strength of its core automotive and energy businesses and the near-term costs of heavy investment in next-generation technologies.
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