Tesla, Inc.’s TSLA core electric-vehicle manufacturing business hasn’t
been immune to the industry-wide downturn but the Elon Musk-led company has done well to grow
its ancillary businesses, earning the praise of an analyst at Morgan Stanley.
Morgan Stanley’s Adam Jonas reiterated Tesla as the firm’s top pick in the U.S. auto industry, citing
the company’s diversification strategy. He highlighted, “The company continues to take steps to mitigate
downside risks to the core auto business…while shifting incremental resources to stationary energy, compute
infrastructure, robotics, and other expressions of embodied AI.”
The analyst has an Overweight rating and a $310 price target for Tesla shares.
Tesla shares have fallen over 50% from their all-time highs and have significantly underperformed mega-cap tech cohorts for the past three years, Jonas said. Cost control is urgently needed to navigate the storm.
Source: Benzinga Pro
“While we are not holding our breath for a turnaround in global EV margins, we feel it’s important for Tesla to continue to demonstrate cost control in the business for investors to begin to appreciate the expanding ‘surface area’ between its business model and the AI theme,” the analyst stated.
The forecasted 2024 GAAP operating profit for Tesla stands at $5.6 billion. However, after removing the $2.3 billion in zero-emission vehicle credits and Tesla Energy operating profit, the core auto operating profit is left at $2.2 billion, according to Jonas.
The analyst highlighted the potential factors pinching Tesla’s margins, indicating that the auto business might have experienced losses in the specified year due to various expenses and revenue dynamics.
Looking forward, the approaching Robotaxi Day, set for Oct. 10, carries mixed expectations. The event, scheduled to be held at Warner Brothers studios, is anticipated to showcase the latest version of Full Self-Driving technology along with a demonstration of a fully autonomous ‘cyber-cab.’
Jonas added insights by mentioning Tesla’s current permits for autonomous vehicle testing and deployment, shedding light on the regulatory aspects surrounding the company’s AV endeavors.
In premarket trading on Friday, Tesla stock experienced a slight 0.84% decline to $228.24.
Explore more of Benzinga’s Future Of Mobility coverage here.