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Tesla’s growth story continues in manufacturing and not autonomy: Morgan Stanley

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Tesla’s (NASDAQ: TSLA) growth story has leaned on the potential of autonomous, self-driving vehicles revolutionizing the way everyday transportation is performed. While Tesla has developed its Autopilot and Full Self-Driving suites with relative success in the past several years, Morgan Stanley analysts are not convinced that autonomous driving programs will continue to fuel the automaker’s growth story and continuing expansion. Instead, Tesla’s bread and butter, which is vehicle manufacturing, along with other strengths like material sourcing, supply chain, and infrastructure development, is where the financial firm is putting its money.

It is no secret Tesla has fallen short with its FSD and Robotaxi plans, as CEO Elon Musk has predicted since 2018 that the automaker would complete its venture into fully-autonomous vehicles. However, each year has gone by with a new set of challenges, whether they would be based on manufacturing or the supply of necessary parts, further delaying the rollout of a “feature complete” FSD suite or a rollout of the planned Robotaxi fleet. This has led to some skepticism about whether the electric car company will really continue its monumental pace of growth through that medium, and not another, which Tesla has already proven to be well-versed in: manufacturing.

Tesla manufacturing prowess, stock split plans indicate ‘massive position of strength:’ Wedbush

A new note to investors from Adam Jonas and other analysts at Morgan Stanley seems to indicate the latter, that Tesla’s true road to continuing expansion and increased valuations is a focus on what it does best. For the past several years, Tesla has focused intently on increasing manufacturing efficiency and accuracy, and it has ultimately led to a streak of nine consecutive quarters of growth in vehicle deliveries. While that streak may be in jeopardy due to the shutdowns of its most-productive factory, which is in Shanghai, there is still evidence to suggest that Tesla’s best way to continue growing is through its production prowess.

“With respect to Tesla, we think attributes like AI, autonomous, and EV are fully, if not over-appreciated here,” the analysts wrote in their note. “In fact, we believe Tesla’s more ‘gritty’ capabilities in terms of manufacturing, material sourcing, supply chain, and infrastructure will drive the next leg of growth to the story.”

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Tesla will trade with increased volatility in the coming weeks and months, Morgan Stanley predicted in the new note. The company’s focus on its autonomy may be dragging down expectations for the stock, as Tesla continues to push its belief that FSD and Level 4 to Level 5 autonomy will be arriving by the end of the year. The analysts see this as a major issue in Tesla’s outlook moving forward:

“Firstly, we think the core auto margin is too high at this point, as it does not fully reflect input cost inflation. Secondly, we believe expectations of full autonomy or FSD ‘flipping’ into a major near-term margin boost are overestimated. In fact, we believe L4/L5 autonomy at scale is well over a decade away. It will come folks, but it’s too darn difficult.”

In reality, Tesla has made major strides in its FSD program through the Beta fleet, and Autopilot is coming off of one of its safest years in history when compared to nationwide accident data from the NHTSA. But whether Tesla will solve full autonomy by the end of the year as Musk expects truly remains to be seen.

Musk remains confident with Tesla’s development of FSD and said earlier this year that he would be “shocked” if the company cannot effectively develop major improvements and complete the suite by the end of 2022. Meanwhile, Tesla’s Robotaxi fleet will likely come with a dedicated vehicle design in the coming years, based on predictions from company executives during its most recent earnings call. While Tesla’s outlook on Robotaxis was previously about owners making money from the operation of the ride-sharing service, the automaker has shifted to another perspective, which aligns more with its focus on sustainability. Read more about that here.

Jonas still holds a $1,300 price target on Tesla stock with an ‘Overweight’ rating.

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Disclosure: Joey Klender is a TSLA Shareholder.

I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

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Tesla called ‘biggest meme stock we’ve ever seen’ by Yale associate dean

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Credit: Tesla

Tesla (NASDAQ: TSLA) is being called “the biggest meme stock we’ve ever seen” by Yale School of Management Senior Associate Dean Jeff Sonnenfeld, who made the comments in a recent interview with CNBC.

Sonnenfeld’s comments echo those of many of the company’s skeptics, who argue that its price-to-earnings ratio is far too high when compared to other companies also in the tech industry. Tesla is often compared to companies like Apple, Nvidia, and Microsoft when these types of discussions come up.

Fundamentally, yes, Tesla does trade at a P/E level that is significantly above that of any comparable company.

However, it is worth mentioning that Tesla is not traded like a typical company, either.

Here’s what Sonnenfeld said regarding Tesla:

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“This is the biggest meme stock we’ve ever seen. Even at its peak, Amazon was nowhere near this level. The PE on this, well above 200, is just crazy. When you’ve got stocks like Nvidia, the price-earnings ratio is around 25 or 30, and Apple is maybe 35 or 36, Microsoft around the same. I mean, this is way out of line to be at a 220 PE. It’s crazy, and they’ve, I think, put a little too much emphasis on the magic wand of Musk.”

Many analysts have admitted in the past that they believe Tesla is an untraditional stock in the sense that many analysts trade it based on narrative and not fundamentals. Ryan Brinkman of J.P. Morgan once said:

“Tesla shares continue to strike us as having become completely divorced from the fundamentals.”

Dan Nathan, another notorious skeptic of Tesla shares, recently turned bullish on the stock because of “technicals and sentiment.” He said just last week:

“I think from a trading perspective, it looks very interesting.”

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Nathan said Tesla shares show signs of strength moving forward, including holding its 200-day moving average and holding against current resistance levels.

Sonnenfeld’s synopsis of Tesla shares points out that there might be “a little too much emphasis on the magic wand of Musk.”

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

This could refer to different things: perhaps his recent $1 billion stock buy, which sent the stock skyrocketing, or the fact that many Tesla investors are fans and owners who do not buy and sell on numbers, but rather on news that Musk might report himself.

Tesla is trading around $423.76 at the time of publication, as of 3:25 p.m. on the East Coast.

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Elon Musk affirms Tesla commitment and grueling work schedule: “Daddy is very much home”

The remarks came as Tesla shares crossed the $400 mark on the stock market.

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Tesla CEO Elon Musk reiterated his commitment to the electric vehicle maker and its future projects this week, responding to speculation following his $1 billion purchase of TSLA stock. 

The remarks came as Tesla shares crossed the $400 mark on the stock market, extending a rally fueled in part by Musk’s TSLA purchase.

Elon Musk’s nonstop work schedule

Amidst the reaction of TSLA stock to Musk’s $1 billion investment, Tesla owners such as @greggertruck noted that “Daddy’s home.” Musk replied, stating that “Daddy is very much home.” He then shared details of a packed weekend of work, which was definitely grueling but completely within character for a “wartime CEO.”

Musk did note, however, that he had lunch with his kids during the weekend despite his extremely busy schedule.

“Daddy is very much home. Am burning the midnight oil with Optimus engineering on Friday night, then redeye overnight to Austin arriving 5am, wake up to have lunch with my kids and then spend all Saturday afternoon in deep technical reviews for the Tesla AI5 chip design. 

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“Fly to Colossus II on Monday to walk the whole datacenter floor, review transformers and power production (excellent progress), depart midnight. Then up to 12 hours of back-to-back meetings across all Tesla departments, but with a particular focus on AI/Autopilot, Optimus production plans, and vehicle production/delivery,” Musk wrote in his post

Wartime CEO

Wedbush analyst Dan Ives described Musk as operating in “wartime CEO mode,” highlighting autonomous driving and AI as a trillion-dollar market opportunity for Tesla. Musk reiterated this point late last month as well, when he outlined the several projects he is juggling among his numerous companies. At the time, Musk stated that he was busy with Starship 10, Grok 5, and Tesla V14. This was despite his notable presence on X. 

With Tesla Master Plan Part IV being partly released, the company is entering what could very well be its most ambitious stage to date. To usher in an era of sustainable abundance, Tesla would definitely require a “wartime CEO,” someone who could remain locked in and determined to push through any obstacles to ensure that the company achieves its goals.

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Elon Musk

Tesla analyst says Musk stock buy should send this signal to investors

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish.”

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(Credit: Tesla)

Tesla CEO Elon Musk purchased roughly $1 billion in Tesla shares on Friday, and analysts are now breaking down the move as the stock is headed upward.

One of them is William Blair analyst Jed Dorsheimer, who said in a new note to investors on Monday that Musk’s move should send a signal of confidence to stock buyers, especially considering the company’s numerous catalysts that currently exist.

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

Dorsheimer said in the note:

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish. This purchase is Musk’s first buy since 2020. To us, this sends a strong signal of confidence in the most important part of Tesla’s future business, robotaxi.”

Musk putting an additional $1 billion back into the company in the form of more stock ownership is obviously a huge vote of confidence.

He knows more than anyone about the progress Tesla has made and is making on the Robotaxi platform, as well as the company’s ongoing efforts to solve vehicle autonomy. If he’s buying stock, it is more than likely a good sign.

Tesla has continued to expand its Robotaxi platform in a number of ways. The project has gotten bigger in terms of service area, vehicle fleet, and testing population. Tesla has also recently received a permit to test in Nevada, unlocking the potential to expand into a brand-new state for the company.

In the note, Dorsheimer also touched on Musk’s recent pay package, revealing that William Blair recently met with Tesla’s Board of Directors, who gave the firm some more color on the situation:

“We recently participated in a meeting with Tesla’s board of directors to discuss the details of Musk’s performance package. The board is confident of its position in the Delaware case and anticipates a verdict by end of year. It does not expect a similar situation to occur under new Texas jurisdiction. Musk has the board’s full support, and we expect he’ll get more than enough shareholder support for this to pass with flying colors.”

Tesla stock is up over 6 percent so far today, trading at $421.50 at the time of publication.

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