Morgan Stanley interprets "Trump&Musk" conflict: Musk's meticulous design, the market underestimates his capabilities, and there will be many trading opportunities ahead
Morgan Stanley believes that the "Trump & Musk rivalry" is not a spur-of-the-moment decision, but rather a carefully planned strategy by Musk aimed at achieving specific goals and garnering maximum public attention. He has brought the issues of the U.S. budget deficit and debt to the forefront because he believes that no matter how successful companies like Tesla and SpaceX are on an individual level, these companies are ultimately closely tied to the overall financial strength of the country. Morgan Stanley warns that if the "Trump & Musk" disagreements continue to escalate, Tesla's stock price will face more severe fluctuations, but at the same time, it will create numerous trading opportunities
When the world's richest man clashes with the U.S. president on social media, the capital market senses unusual signals.
According to reports from Chasing Wind Trading Desk, Morgan Stanley's latest report reveals that this seemingly sudden "Trump & Musk battle" is actually a carefully designed strategy by Musk to achieve specific goals and gain attention. He believes that the fate of enterprises is ultimately closely related to the overall financial strength of the country. The market has clearly underestimated Musk's determination and ability to withstand negative shocks. The decline in Tesla's stock price may only be a temporary "sacrifice."
This Wall Street giant warns investors that if the disagreements between Musk and the president continue to escalate, Tesla's stock price will face more severe fluctuations, but it will also create numerous trading opportunities. Analysts maintain Tesla as the "preferred stock" in the U.S. automotive sector, with a target price of $410, optimistic about its long-term prospects in the field of physical AI.
Musk's Strategic Layout
In a report released on June 10, Morgan Stanley's automotive team unusually included Musk's political actions in the investment framework analysis of Tesla.
Morgan Stanley analyst Adam Jonas pointed out that Musk's recent comments about America's "twin deficits" (budget deficit and national debt) are by no means spontaneous. Last week's "Trump & Musk battle" is likely a carefully planned strategy by Musk to achieve specific goals, aiming to bring relevant issues to the forefront of public attention through his influence.
Analysts interpret that the credit outlook and fiscal situation in the U.S., including budget deficits and national debt, seem to have risen to the top priority for Tesla's CEO. Morgan Stanley believes that Musk is convinced that no matter how successful companies like Tesla and SpaceX are on an individual level, these companies are ultimately closely related to the overall financial strength of the country.
Musk likens U.S. sovereign credit to a "ship at sea," pointing out that the health of national finances is the ultimate anchor for corporate development.
$300 Billion "Ammunition": Underestimated Influence
Morgan Stanley's report particularly emphasizes a key factor overlooked by the market: Musk possesses assets ranging from $300 billion to $350 billion (including public and private assets). He can leverage a tiny portion of his wealth to influence national policy discussions. Morgan Stanley poses a question:
How much attention and support can $5 billion or $10 billion bring to issues that Musk deems important?
This substantial financial background gives Musk's every public statement an influence and sustainability that surpasses that of ordinary entrepreneurs.
Analysts believe that history is telling investors that they may once again underestimate Musk's determination and his resilience in withstanding criticism and financial losses. Jonas reminds investors to reflect on history in the report:
Do you remember the collective skepticism of the market when Musk acquired a social media company (Twitter) a few years ago? Do you recall the frustration when he began to visibly allocate resources to the political arena?
According to Morgan Stanley's analysis, Musk's involvement in political activities has a negative impact on Tesla's products and brand, which is a short-term "sacrifice" that will not be a surprise to the company's management.
Trading Opportunities Amid Fluctuations
Morgan Stanley warns that if the confrontation between Musk and Trump continues to escalate, the volatility of Tesla's stock will further increase, but such drastic fluctuations will also create "a series of trading opportunities."
It is noteworthy that Musk currently manages five companies (Tesla, SpaceX, Boring, Neuralink, xAI), controlling four of them as private companies, but holding only 13% of the shares in the publicly traded Tesla (excluding the controversial compensation plan).
Morgan Stanley believes that Tesla's expertise in manufacturing, data collection, robotics/physical AI, energy, supply chain, and infrastructure is more important than ever for keeping the U.S. competitive in the field of embodied AI compared to other countries.
Maintain "Preferred Stock" Rating
Despite facing political risks, Morgan Stanley still maintains Tesla as the "preferred stock" in the U.S. automotive sector, with a target price of $410 (representing a 33% upside from the closing price of $308.58 on June 9).
The investment bank stated that its overweight rating and price target are based on confidence in Tesla's capabilities in key areas of physical AI, including autonomous vehicles, humanoid robots, and other form factors, covering data, robotics, energy storage, computing, manufacturing, and space/communication/network/infrastructure. These growth and profit opportunities far exceed those of traditional electric vehicle businesses.
As various businesses continue to expand, Morgan Stanley expects that the timing for strategic cross-collaboration between different entities is approaching: Grok entering the automotive sector, SpaceX loading Cybertruck, Optimus prosthetics for Neuralink patients, xAI training in Optimus and Cybercab, etc., with abundant possibilities.
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