Tesla "Iron Fans" Morgan Stanley: Long-term outlook for Tesla is positive, with the most optimistic expectation reaching 800

Recently, Tesla's stock price has experienced a rollercoaster-like fluctuation; however, Morgan Stanley believes this is not a bad thing and instead sees it as an opportunity.

On March 11, Tesla began a rebound trend, ultimately closing at $230.58, with a slight increase to $234.99 in after-hours trading.

Despite Tesla's nearly 40% decline so far this year, Morgan Stanley remains optimistic about Tesla's future in its latest research, stating that Tesla is the "preferred choice in the U.S. automotive and shared mobility sectors."

In the report, Morgan Stanley provided a benchmark target price of $430, while emphasizing that in a bearish scenario, the stock price could drop to $200, whereas in an optimistic scenario, it could soar to $800. Additionally, Morgan Stanley candidly pointed out the challenges Tesla currently faces—sales data falling short of expectations, brand image affected by negative sentiment, and market "de-risking."

Tesla Faces "Headwinds," Declining Sales and Negative Sentiment

Tesla's stock price reflects, to some extent, investors' concerns about the decline in Tesla's sales.

Tesla's sales in January fell by 45% year-on-year, while overall sales in Europe grew by 37%, and there are clear signs of a slowdown in Tesla's market in China. Automotive analyst Tim Hsiao noted that the latest weekly order estimates indicate that the order volume from February 24 to March 2 was between 11,000 and 13,000 vehicles, down from 15,000 to 17,000 vehicles the previous week.

Morgan Stanley calculated that for every 10% decline in Tesla's sales, it would lose about $2 billion in EBIT (earnings before interest and taxes), and when considering working capital, the cash flow loss would approach $4 billion. Nevertheless, Morgan Stanley still predicts a 7% increase in Tesla's sales this year.

Morgan Stanley observed that the narrative surrounding Tesla among investors is often closely tied to its stock price.

In December of last year, when Tesla's stock price was close to $500, the market generally viewed the company as a "winner" in the field of artificial intelligence, with enormous potential in embodied AI. Now, against the backdrop of a 50% drop in stock price, investors' focus has shifted to management distractions, brand image damage, and declining car sales. This reflects that investor sentiment has a significant impact on Tesla's stock price.

Morgan Stanley Remains Bullish on Tesla, Benchmark Target Price of $430

Despite facing challenges, Morgan Stanley maintains an optimistic outlook on Tesla's future.

The research report proposed a benchmark target price of $430, which is composed of five components: Tesla's core automotive business ($86/share), network services ($172), Tesla's mobility services ($90), energy business ($65/share), and the value as a third-party supplier ($17/share) Morgan Stanley believes that after the current stock price decline, Tesla's forward price-to-earnings ratio for 2030 has dropped to 19 times, with an EV/EBITDA of about 10 times. Considering Tesla's earnings growth expectations relative to its valuation and the positive risk-return bias, Morgan Stanley has rated it as the "preferred" choice in the U.S. automotive and shared mobility sectors.

The report points out that in the next year, Tesla's stock price could fluctuate between $200 and $800, highlighting several important catalysts:

• Release of Austin robotaxi: Tesla is expected to launch its robotaxi in Austin between June and August, which will be the first customer-facing car without a steering wheel.

• AI/Humanoid day: By the end of this year, Tesla is expected to showcase the latest technology of its Optimus humanoid robot.

At the same time, Morgan Stanley emphasizes Tesla's long-term value in the fields of artificial intelligence and robotics, which has compound growth potential