Investor's Corner
Tesla’s $10 ‘bear case’ from Morgan Stanley highlights the noise surrounding TSLA
Tesla stock (NASDAQ:TSLA) looked alarming right before the markets opened on Tuesday amidst news that Morgan Stanley analyst Adam Jonas had lowered the electric car maker’s “bear case outcome” to just $10 per share, a steep drop from his initial worst-case scenario estimate of $97 per share. The analyst’s findings dealt a blow to Tesla stock during pre-market trading, pushing shares down by over 3% at one point.
The Morgan Stanley analyst’s worst-case estimate was driven in part by concerns about Tesla’s business in China, which would likely be adversely affected by the ongoing trade war between the country and the United States. According to Jonas, Tesla could generate about $9 billion in revenues in China between 2020 and 2024, but if Beijing targets the company with reprisal tariffs and restrictions, that figure could be halved, resulting in more than $16 billion of the electric car maker’s market value getting wiped out.
“Our revised case assumes Tesla misses our current Chinese volume forecast by roughly half, to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention. We believe as Tesla’s share price declines, the likelihood of the company potentially seeking alternatives from strategic/industrial/financial partners rises,” Jonas noted.
The analyst’s radical $10 estimate for Tesla unsurprisingly attracted a lot of attention, and it did not take long before news of Morgan Stanley’s updated views made the rounds online. What was not reported as much was that Adam Jonas kept his $230 price target on TSLA stock, as well as his equal-weight rating for the company under the firm’s best-case scenario. Also left out in a number of reports was Morgan Stanley’s best-case price target of $391, which is actually pretty optimistic considering the recent movements of Tesla stock.
Other personalities in the financial world eventually gave their take on Jonas’ worst-case scenario for Tesla. Jim Cramer, who has traded barbs with Elon Musk in the past, described the $10 estimate as “insane” and a simple gimmick. “Setting a price target of $10 on a $200 stock really is insane. How about $8? How about $12? Ten basically says, ‘I want to get talked about. Let’s talk about me,’” Cramer said, adding that “if he had done $47 would we have talked about him? No, but 10. Ten is right in your face. I question this piece of research.”
Cathie Wood of ARK Invest, who still maintains a positive stance on the company, also questioned the Morgan Stanley analyst’s findings. “Also interesting to note, Jonas cut his worst-case price by more than 90% but left his price target unchanged at $230. So, I guess he is suggesting that the probability of the bear case has dropped significantly, and/ or the probability of the bull case has increased,” Wood wrote on Twitter.
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Considering the pervading negativity surrounding Tesla’s narrative today, it is unsurprising to see aspects of Morgan Stanley’s recent note getting misinterpreted. A look at social media platforms such as Twitter, for example, would reveal some Tesla critics stating that the $10 worst-case estimate was Morgan Stanley’s new price target for TSLA stock. This is untrue, but these instances all but highlight how easy it is for misconceptions about the electric car maker could spread.
This pervading negativity is seen in the mainstream coverage of the company. On Monday, Dan Ives from Wedbush Securities cut his price target and penned a scathing note to Tesla, even describing Elon Musk’s initiatives such as Full Self-Driving and the Robotaxi network as “sci-fi projects.” Ives’ statements on Monday garnered widespread attention, significantly more than his comments on Tuesday, when he explained that he does not think Tesla will eventually file for bankruptcy. Ives also noted on Tuesday that Tesla could return to profitability in the future, provided that demand is sustained and costs are cut.
At this point, it appears that the time is right for Tesla to adopt a more assertive PR strategy that is ready to debunk misinformation and clarify misconceptions at a moment’s notice. By doing so, Tesla can lay out its case clearly, providing explanations as necessary and leaving little to speculation. This would require constant vigilance on the part of the electric car maker, but it would help, at least by straightening out the facts of a story. These initiatives, coupled with an aggressive information campaign that dispels misconceptions about the company and its vehicles, could ultimately allow Tesla to change the course of its narrative for the better.
As of writing, Tesla stock is trading -0.29% at $204.76 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
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Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
-->“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
-->Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
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