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Morgan Stanley: Tesla Miss Not A 'Death Mistake'

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Although Tesla Motors Inc (NASDAQ: TSLA) disappointed many analysts by reporting a loss on Wednesday, few have gone bearish on the company. However, there is a concern regarding the company’s financials and the way it’s burning cash.

Adam Jonas, Morgan Stanley's lead auto analyst, was on CNBC Thursday to discuss Tesla’s results and why he thinks comparisons to Apple don’t make sense right now.

Not A ‘Death Mistake’

“It seems like Elon Musk has pushed the insane button on his spending ambitions and the growth ambitions,” Jonas said.

“I kind of cringe whenever I hear these comparisons with Apple, especially from a share price perspective; we want this company to keep focusing on hiring the best people on Silicon Valley, disrupting the auto industry and making the customers really happy.

“So, no, I don’t think it’s a death mistake. I just kind of cringed a bit. The real story here, guys, is this company wants to grow massively at all costs. And short-term profit maximization is certainly not a priority of this company. So, investors have to digest all that right now.”

Related Link: Tesla Live Blog: Q4 Earnings Conference Call

Was The Stock Reaction Expected?

“We think the stock price reaction today makes a lot of sense,” Jonas replied.

“A lot of people on page one or otherwise are asking questions. 'What am I involved in here?' On one level, I think some of the messages from the conference call was [sic.] you have the Silicon Valley mentality of cash-burn is good."

He continued: “Whereas, if we're generating cash so early, that would be bad because we would be making 0.1 percent in our savings account. So, that’s a big digestion for investors, and it’s kind of a return to what we call investment fundamentalism, or belief-based investing.

“We see a $10 trillion addressable market globally, and there’s no one better positioned to disrupt it than these guys," Jonas concluded.

Latest Ratings for TSLA

Feb 2017RBC CapitalMaintainsSector PerformSector Perform
Jan 2017Morgan StanleyUpgradesEqual-WeightOverweight
Jan 2017GuggenheimInitiates Coverage OnBuy

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Posted-In: Adam Jonas CNBC Elon Musk Silicon ValleyAnalyst Color CNBC Analyst Ratings Media


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