Skip to main content

Market Overview

Morgan Stanley Says The Market Is Underappreciating Tesla's AV Business

Share:
Morgan Stanley Says The Market Is Underappreciating Tesla's AV Business

Tesla Inc (NASDAQ: TSLA) shares have bounced off of their May lows in recent weeks on optimism about second-quarter deliveries. The stock remains down 40 percent in the past six months, but one Wall Street analyst said Tuesday the market may be underappreciating sources of value within Tesla’s business.

The Analyst

Morgan Stanley analyst Adam Jonas reiterated his Equal-Weight rating and $230 price target.

The Thesis

Jonas said Tesla’s autonomous driving technology business is worth about $45 per Tesla share and is not fully appreciated by the market.

“While we acknowledge the higher degree of urgency needed for traditional industrial companies to form separate ‘tech-centric units’ to attract and retain talent vs. a company like TSLA, already widely thought of as a tech platform, we believe there are potential advantages to considering the value encapsulated within Tesla in the form of hardware, software, and access to substantial amounts of driving data/miles,” Jonas wrote in a note.

Other AV companies, including General Motors Company (NYSE: GM), Ford Motor Company (NYSE: F) and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) have separated out their AV businesses into standalone segments. Jonas said this strategy helps these companies attract and retain talent, highlight the focus on technology, open the door for technology partnerships and create more opportunities for high-value fundraising.

GM Cruise is an example of how GM created a separate legal entity specifically to focus on AV tech. Jonas values GM Cruise at roughly $9 billion, or about $6 per GM share.

As AV technology development becomes more central to these auto companies over time, Jonas said the ability to attract and retain talent and secure funding will be critical.

Price Action

Tesla's stock traded higher by 2.2 percent to $217.70 per share on Tuesday morning.

Related Links:

Tilson Talks Tesla Deliveries And Guidance, Staying Adaptable As A Trader

2 Areas Where Tesla's Technology Is In A League Of Its Own, According To Gene Munster

Photo courtesy of Tesla.

Latest Ratings for TSLA

DateFirmActionFromTo
May 2021Wells FargoInitiates Coverage OnEqual-Weight
Apr 2021Canaccord GenuityMaintainsBuy
Apr 2021Credit SuisseReiteratesNeutral

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

 

Related Articles (GM + TSLA)

View Comments and Join the Discussion!

Posted-In: Adam Jonas Autonomy Morgan StanleyAnalyst Color Reiteration Top Stories Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
GOTUCitigroupDowngrades12.0
ATERRoth CapitalMaintains25.0
FMTXSVB LeerinkMaintains54.0
TALCitigroupDowngrades
PLXSLoop CapitalMaintains105.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com