Tesla stock (NASDAQ: TSLA) have experienced significant declines recently, particularly due to the company missing its delivery estimates for the fourth quarter. This has only added to the damage caused by CEO Elon Musk’s controversial use of Twitter. As a result, the stock has suffered greatly.
“Morgan Stanley’s Adam Jonas believes that the recent poor performance of Tesla’s stock, which has declined by 42% over the past month, is due to a surplus of electric vehicle supply compared to demand for the first time since the COVID-19 pandemic began. This has been compounded by technical factors.”
According to Jonas, the trend of electric vehicle supply exceeding demand is expected to reverse in 2023, with demand surpassing supply. This shift in the market will have significant impacts and marks a “reset” year for the electric vehicle market.
“Jonas believes that companies that are self-funded and have shown strong cost leadership and scale across the entire value chain, from manufacturing to raw material sourcing, will perform well in this market environment.”
According to Jonas, even without considering the benefits of the Inflation Reduction Act, of which Tesla is expected to be the biggest beneficiary, the company is well-positioned to further its lead over its electric vehicle competition in the fiscal year 2023, including both established automakers and start-ups.
Although 2023 is expected to present challenges such as a deteriorating economic environment, high unaffordability, and increased competition, Jonas believes that Tesla will be able to overcome these obstacles by leveraging its cost and scale advantages. As a result, the analyst believes that the current stock price presents a good opportunity for investors to enter the market.
Based on the aforementioned analysis, Jonas has given Tesla a “Buy” rating and a $250 price target. This implies that the stock could trade at a 120% premium in a year’s time. (For Jonas’s track record, click here)
As is typical, Tesla has received a significant amount of attention from analysts on Wall Street. In the past three months, 30 analysts have issued ratings on the stock, with 18 recommending to “Buy,” 10 suggesting to “Hold,” and 2 recommending to “Sell.” Overall, the consensus rating is “Moderate Buy.” The average price target is $257.96, indicating a potential upside of about 127% from current levels.
Please note: that the views expressed in this article are solely those of the featured analyst and are intended for informational purposes only. It is important to conduct your own analysis before making any investment decisions.
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