The Pioneering Journey of Tesla in the Auto Industry
Amidst the industry-wide downturn in the electric vehicle sector, Tesla, Inc. has been navigating choppy waters. However, under the stewardship of Elon Musk, the company has not just weathered the storm but also diversified its revenue streams, earning accolades from analysts at Morgan Stanley.
Analyst’s Vote of Confidence in Tesla
Adam Jonas from Morgan Stanley reiterated Tesla as the top pick in the U.S. auto industry, attributing the decision to the company’s strategic diversification. He highlighted Tesla’s proactive measures to safeguard the core auto business while expanding into areas such as stationary energy, compute infrastructure, and robotics.
Jonas maintains an Overweight rating on Tesla with a $310 price target for its shares, emphasizing the firm’s confidence in the company’s future prospects.
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Navigating Market Challenges
Despite Tesla’s recent stock price decline of over 50% and its underperformance compared to tech giants, Jonas underscores the critical importance of cost control. The analyst emphasizes the need for Tesla to exhibit stringent cost management as a key factor for investor confidence and to align its business model with the prevalent AI thematic trend.
Assessment of Tesla’s Margins
Jonas delves into Tesla’s forecasted 2024 GAAP operating profit, highlighting the core auto operating profit of $2.2 billion after accounting for various factors. He points out potential challenges faced by Tesla’s auto business in achieving profitability and notes the impact of non-auto expenses, particularly in AI infrastructure.
Anticipating Robotaxi Day
Looking ahead to Robotaxi Day on October 10, Jonas tempers expectations, suggesting that the event at Warner Brothers studios may showcase advancements in Full Self-Driving technology. However, he highlights the firm’s current limitations in autonomous vehicle testing, indicating that significant strides are still required for full autonomous deployment.
Despite the buzz surrounding Robotaxi Day, Tesla’s stock experienced a minor pre-market decline, reflecting the cautious sentiment in the market.
