This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Investment bank Morgan Stanley, who is one of the most optimistic voices for Tesla's shares, has joined the recent wave of share price target cuts for the firm. Morgan Stanley has slashed its Tesla share price target by $20 to $410 as it lowers the firm's delivery estimates for the first quarter and the full year. Tesla's vehicle deliveries have been at the forefront of investor attention this month and have contributed to a 19% month-to-date share price drop. Investment banks and analysts have weighed in on the extent of Tesla CEO Elon Musk's political activities on the demand for his firm's products and wondered whether vehicle upgrades and slower production are also playing a role.
Morgan Stanley Also Lowers 2030 Tesla Vehicle Delivery Estimates By Half A Million
Tesla's shares were flat during the course of today's trading as the firm announced that it would recall 46,000 Cybertrucks due to trim detachments increasing the risks of an accident. The stock is down by 10% since last week's selloff after paring back some of its losses. However, since its post-election December peak, the shares are down by more than 50% as investors sour on the firm's delivery estimates for the first quarter and full year 2025.
In its latest analyst note, Morgan Stanley reduces Tesla's share price target to $410 from an earlier $430. The bank, however, notes that while Tesla's deliveries have lagged estimates, they do not change its investment thesis. As part of its rationale behind the price target cut, Morgan Stanley reduces Tesla's first quarter and full year deliveries due to "competition, an aging lineup and a buyers’ strike from negative brand sentiment and upcoming new product."
"FY25 lowered to 1,615k (- 9.8% y/y) vs. 1,924k (+7.5% y/y) previously and FY30 lowered to 4.7mn vs. 5.2mn previously," adds analyst Adam Jonas.
The lower deliveries are at the heart of the price target cut, adds the analyst. Core Auto accounts for less than 20% of Morgan Stanley's fresh $410 Tesla share price target. The lower deliveries mean that fewer Teslas will be available for the firm to generate revenue through services, believes Jonas. Since services account for a larger portion of Morgan Stanley's Tesla valuation, the 'flow through' to services also accounts for the lower price target.
The investment bank maintains its Overweight rating on the shares and keeps the stock as a Top Pick among US autos. In his previous coverage, Jonas has opined that the dip in Tesla's share price could create an attractive entry point for the stock.
However, for the first quarter, Jonas cites data from multiple sources to reduce his estimates. He reduces his first quarter deliveries by 64,000 to 351,000 for a 9.3% annual drop which stands in sharp contrast to the earlier expectations of a 7.3% annual growth.
Along with Morgan Stanley, Cantor's Andres Sheppard has also shared that the dip in Tesla shares could create an entry point. As it becomes "bullish on TSLA ahead of material catalysts," the Cantor note adds that "We see future revenue upside from FSD, Robotaxi, Energy Storage & Deployment, and Optimus Bots, to be fundamental to TSLA's thesis over the long term."
