Jon Hadad

About the Author Jon Hadad

Jon Hadad graduated from the University of Delaware with a degree in political science. Prior to joining the Smarter Analyst team, he was an industry analyst at a New York research firm.

Tesla (TSLA) Stock Remains a Show Me Story


Don’t look now, but Tesla (TSLA) shares have recently started to creep up again.

Following a disastrous first five months to the year, where TSLA plunged over 40%, the company’s stock is up nearly 17% since the beginning of June. While perhaps not indicative of the long-term future, any rise must feel nice for Tesla investors. The company has been plagued by demand challenges and finances turmoil, which was put to rest (for now) after a multi-billion dollar capital raise last month.

But Wall Street appeared divided whether to judge the electric car giant — by the short-term challenges or long-term potential? Morgan Stanley analyst Adam Jonas looks to the long-term, as he maintains his Equal-weight rating and $230 price target on the stock. (To watch Jonas’ track record, click here)

The analyst believes “investors underappreciate [and] undervalue Tesla’s autonomy business,” which still has some time to go before it is ready for mainstream. While CEO Elon Musk promised full autonomy next year, the company still must convince the public to trust its systems, while governments must give the green light to the new technology. Of course, Tesla must ensure its technology actually is ready.

Besides self-driving, Jonas also sees Tesla’s charging infrastructure, solar business and battery development as “other areas with potential commercial value beyond manufacturing of Tesla vehicles.” While the company continues to focus on building and selling its cars, Jonas believes that the parts that go into manufacturing could be of value, too, as other automakers build electric cars and the alternative energy market continues to grow.

Jonas sees “talent retention and continued access to capital as important priorities for the company.” This implies that Jonas believes Tesla needs a long runway to accomplish everything it has promised. The company recently raised $2.7 billion through a combination of debt and equity, which will stave off any immediate finance concerns. Nevertheless, many investors believe Tesla must produce in the short-term in order to get to fulfill long-term promises.

All in all, most of Wall Street echoes a neutral point of view, with TipRanks analytics exhibiting TSLA as a Hold. Based on 24 analysts polled in the last 3 months, 8 rates a Buy on Tesla stock, 5 maintain a Hold, while 11 issue a Sell on the stock. The 12-month average price target stands at $264.50, marking a nearly 25% upside from where the stock is currently trading. (See TSLA’s price targets and analyst ratings on TipRanks)

 

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