Tesla Inc. TSLA shares have been on an eight-session winning streak, and in the past couple of sessions, they bucked the broader market weakness. A Tesla bull is apparently uncomfortable with the steep rise in a short timeframe.
The Tesla Analyst: Morgan Stanley analyst Adam Jonas reiterated an Overweight rating and $220 price target for Tesla shares.
The Tesla Thesis: With Tesla doubling from the Jan. 3 lows and approaching Morgan Stanley’s price target, Jonas looked at the various dynamics that were in play through the uptrend.
He noted that the upside has been accompanied by unusually high volume, with an accumulated dollar value of $840 billion over the 27 sessions of the year-to-date period. This compares to $525 billion in the trailing 27 days up to the end of 2022, he noted.
Sentiment has taken a hit after the recent runup, as reflected by a sharp decline in incoming call volume from clients on Tesla over the past week, Jonas said. “We empathize with a resistance to chase a chart like that,” he added.
The analyst also noted that Tesla’s shares have gained 68%, outperforming pureplay electric vehicle peers such as Lucid Group Inc. LCID, Rivian Automotive Inc. RIVN and Fisker Inc. FSR. These rivals were up 51%, 5% and 1%, respectively, he said.
Jonas expects Tesla to invest its innovation into the margin, which in turn will drive lower per-unit bill-of-materials cost, forcing competing EV companies to consolidate.
Jonas also sees the Master Plan 3 to be unveiled at the March 1 Investor Day to be a catalyst. He said he would look forward to seeing progress on the manufacturing side, including the giga press, 4680 battery pack, structural pack and other innovations. The analyst, however, said he is wary of risks around Fed sentiment, China commentary and other idiosyncratic risks.
“We believe the window of opportunity on ‘valuation’ has closed,” Jonas said. Further upside from here will require a more substantial narrative change following the March 1 event, he said.
Price Action: Tesla closed Thursday’s session 3% higher at $207.32, according to Benzinga Pro data.