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Where is Tesla Motor's stock headed? Morgan Stanley thinks the answer is down, down, down. Or, at least, less "up" than previously thought.

Morgan Stanley analyst Adam Jonas seriously downgraded his expectations of the TSLA stock from $70 down to $44. That's still up from the current rate of around $31, but it's enough to cause a nine percent drop in today's trading. We have to side with former Tesla employee Darryl Siry, who asks, "How do you slap a sell rating with a $44 price target on a stock trading at around $35?" We certainly don't understand stocks.

Jonas, a long-time Tesla fan, sure uses positive words to describe what Tesla is doing – "Tesla has orchestrated a near flawless execution through the Model S pre-production phase. ... We expect the Model S to launch on time in July, but to ramp up slower than consensus expectations as the company prioritizes delivery quality over quantity" – but in the stock market, that's apparently not enough. The reason for the Tesla downgrade is that Morgan Stanley is now taking an overall dismal view of plug-in vehicles. Instead of an 8.6 global market share by 2025, Morgan Stanley now predicts just 4.5 percent because traditional gas-powered cars are getting so much more efficient, plug-in vehicle sales have not matched expectations and Europe's economic crisis. So, Morgan Stanley is saying, no matter how good Tesla's EV are, the time just isn't right.


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  • 125 Comments
      Dave D
      • 3 Years Ago
      Morgan Stanley? The Morgan Stanley who managed to owe the Fed 750% of their total net worth in the bailout fiasco for Wall Street? THAT Morgan Stanley? Who cares what those clowns say. They just live off "rich man rules" where they get bailed out and handed money no matter how poorly they perform. They have no right to judge anything or anybody: http://blogs.reuters.com/felix-salmon/2011/11/28/chart-of-the-day-morgan-stanley-bailout-edition/
        Ford Future
        • 3 Years Ago
        @Dave D
        Exactly, TESLA is now a popular stock, and therefore has become a TARGET for the Volatility Play. Drive it down, in 2 months drive it back up, repeat cycle. Of course you've got to be on the "First Call" list to benefit from this, can I say the F word here? [ Fraud ]
          Grendal
          • 3 Years Ago
          @Ford Future
          I'd like it to drop to the low twenties so I can buy a boatload of shares.
          Grendal
          • 3 Years Ago
          @Ford Future
          @Dan F That's why buying stocks is just a form of gambling. Don't bet what you aren't willing to lose. I think Tesla's a good bet (and a great bet in the low 20's) - you don't.
          Dan Frederiksen
          • 3 Years Ago
          @Ford Future
          Fordinsight, pump and dump. certainly looks that way when they say price target of 70. Grendal, and you can sell them at 1
        Dave R
        • 3 Years Ago
        @Dave D
        Don't worry, I'm sure there was some insider knowledge and plenty of Tesla shares shorted before this news came out. Someone out there is laughing all the way to the bank on this one.
      EZEE
      • 3 Years Ago
      Here are two links on the subject. One discusses the business plan, and the other goes over the deal with Toyota to build drivetrains for the Rav4. Although the business plan article seems skeptical, it also quotes a bank of America official as saying Elon Musk could be the next Steve Jobs. http://money.cnn.com/2011/09/28/autos/tesla_business_plan.fortune/index.htm http://money.cnn.com/2011/07/20/news/companies/tesla_toyota_electric_rav4/index.htm I almost included an MSNBC article, but their numbers were wildly different than any of the others. The good part about the Toyota deal is, they could add financial backing that could assist tesla through lean times.
      JeremyD
      • 3 Years Ago
      Gotta love these worthless analysts... everything is going fine until they say it shouldn't be (or should be). Like playing god with the stock market. Its better than being an insider, and Im sure they capitalize on it.
      Noz
      • 3 Years Ago
      Who gives a rat's ass what MS says....
        EZEE
        • 3 Years Ago
        @Noz
        the company has 62,542 employees, and millions of investors. I would imagine they care. Not saying they are right or wrong on the tesla, but, you did ask.... In all reality, it doesn't hurt to figure out the much more specific reasons for their statement. The quick blurbs that are offered will not go into any of the detailed reasons for an analysis. They will look at long term growth potential, competition, negative items such as debt and product mix, as well as positive items such as the Toyota deal. Things that PR mentioned concerning debt load versus revenue will also be factored in. And yes, many times they make horrible mistakes, such as the housing crash. I certainly hope this rating is a mistake, but also keep in mind, they are not not saying tesla will go out of business tomorrow, they are looking at the investment potential. Think of it this way. For the short term, IMHO, Apple is a good investment. Apple TV looks interesting, and an iPad 3 is on the way. For the long term, will we see big growth or not? Apple has gotten huge, and they are still making everything proprietary. So right now, it is ios, versus everyone else. With many companies using android, will iOS continue to dominate? These are factors that go into a buy or sell recommendation(along with a pile of others).
        Sonny J Ong
        • 3 Years Ago
        @Noz
        True.
        JeremyD
        • 3 Years Ago
        @Noz
        The same people that go to get their tarot cards read since all this guy is really doing is trying predict the future.
          Dan Frederiksen
          • 3 Years Ago
          @JeremyD
          predicting the future is not impossible. but taking advice from a snake..
      Timo
      • 3 Years Ago
      "Morgan Stanley now predicts just 4.5 percent because traditional gas-powered cars are getting so much more efficient" He misses the point of EV. It's not efficiency that will sell them, it is the convenience to *never* go to gas station ever again. That and better performance, silence, smooth ride and better reliability. Efficiency and low cost of "fuel" is just an icing in a cake. Once we have charging infrastructure in place everyone will be buying EV:s. That happens way before 2025. ICE passenger vehicles are just too obsolete to compete with BEV.
        Spec
        • 3 Years Ago
        @Timo
        I'd like to believe all that . . . but I don't. The only way for EVs to get real popular is if they drop heavily in price (possible but not likely), gas prices shoot up (will happen eventually), or some combo of the two (will happen). EVs have range, refuel, and up-front cost issues. Those can only be overcome by a technology breakthrough or an economic advantage over oil.
          Ford Future
          • 3 Years Ago
          @Spec
          @Spec, same thing with Jag, if they don't drop their price they will never get real popular. I still don't own one.
        Ford Future
        • 3 Years Ago
        @Timo
        Exactly. Electrics make the BEST Luxury Cars Available. The Tesla Model S being the best example. The Jag is Obsolete.
          Spec
          • 3 Years Ago
          @Ford Future
          Yeah, they do make nice luxury cars in that they are totally silent, don't smell, don't pollute, and get rid of the icky filling up with gas factor. GM should have put the the Voltec stuff in a high-end car . . . I don't understand why they cancelled the Cadillac project. I guess the Cadillac luxury brand caters more to the rich old fart that doesn't want new fangled technology.
        Ryan
        • 3 Years Ago
        @Timo
        He is also forgetting how many people hate what the oil companies have become and would choose differently if a viable option exists to not give them money.
      electronx16
      • 3 Years Ago
      Of course if these predictions of financial institutions were worth the paper they were written on the world's financial system wouldn't be on the ropes as it is now with the ordinary citizen being robbed blind through taxation, inflation and being burdened with extra government debt in a series of desperate attempts to save it from total collapse. What the likes of Morgan Stanley are still in denial about is that we're living in a post peak oil world with demand in countries like China and India only just beginning while most the world's oil resources are in the hands of increasingly anti western regimes. The ICE businessmodel is headed for the perfect storm, the future is for new energy vehicles.
        EZEE
        • 3 Years Ago
        @electronx16
        Well said.
        Marco Polo
        • 3 Years Ago
        @electronx16
        @Electronx16 Taxation, Government debt, inflation, what on earth has this got to do with Morgan Stanley or it's analyst? Taxation, government debt etc, are all the responsibility of the government. If the ordinary citizen is being robbed blind, maybe he/she should get of his backside and fulfil his civic duty by voting!? In the US less than 50% can be bothered to exercised this basic civil duty, but 100% complain!
          Marco Polo
          • 3 Years Ago
          @Marco Polo
          @electronx16 Ah, ha, I thought so, just the same old meaningless abusive rant. Governments set policy, impose taxation, conclude disastrous trade treaties, regulate etc. Every citizen in a democracy is a shareholder in the nation. Even ranters like you! (I'm assuming you vote) . Don't like the way things are ? Then get the other 50% of your citizens who are too apathetic to bother voting, to elect you! (Australia has 96% voter turn out, Switzerland 94%).
          electronx16
          • 3 Years Ago
          @Marco Polo
          Meaningless to you maybe , because your game on this forum is to defend corporate narratives 24/7 under the guise of EV advocacy. Most readers I think know very well how they are scr.wed by Big Finance and that they are virtually powerless to do anything about it because Big Finance trumps democracy when it comes down to it. Ezee said it: bail outs come from both sides. @Ezee:: 'socialized losses and privatized profit is not capitalism: good one, now do you think you could explain this to Marco Polo?
          PR
          • 3 Years Ago
          @Marco Polo
          Marco said "Every citizen in a democracy is a shareholder in the nation." So as a self-proclaimed Aussie, you aren't a "shareholder" in the United States. Frankly, I'm a bit tired of people from outside of the United States interfering in US internal politics, as if they actually know what is going on here in the US, or what the American People really want.
          EZEE
          • 3 Years Ago
          @Marco Polo
          :D
          PR
          • 3 Years Ago
          @Marco Polo
          EZEE -- ever the mindless tool. I've been quite open about how under the blog old system I first posted as Nixon (a handle I've used on computers dating back to the 80's). Then I switched to Pablo for a while, but got too many racist comments from right wing idiots when Drudge links to ABG stories and The Stoopid gets deep -- so I switched back to Nixon. Once they switched to the comment system, I've always posted under PR. If you want to go back and look at the archives, it's all there, and I'm completely open about it. Dan is Dan, he's his own person. Frankly (like gorr) I don't read his posts that much. I just smile and mumble something about "good ol' Dan, going for the light thing again" and move to the next post. He's harmless. You, on the other hand, are a negative presence, and this is yet another example. If you want to start calling out people, you better actually know what the heck you are talking about. This mindless garbage is exactly the stuff I keep nailing you on over. Now if Marco Polo wants to set you straight in whatever manner he wants, I'll let him have the first crack at it since you are relatively new here. If not, I'll do it my way.
          EZEE
          • 3 Years Ago
          @Marco Polo
          @electrolux... Believe it or not, we on the right dislike the concept of 'to big to fail.'. Bailouts tend to come from both sides, however. I would be perfectly happy if President Obama, or any other President ended that practice. Or at the very least, fired the board of the company, and prevented them from getting into that lone of business again. SOMETHING to make other CEO's realize that the government won't rescue them in the future, so the better look at risk more effectively. There is even a t- shirt on a right wing website that says, 'socialized losses and privatized profit is not capitalism.'. I doubt there are many in this room who would disagree with that.
          electronx16
          • 3 Years Ago
          @Marco Polo
          Well, if it isn't Marco Polo to the defence. Hardly surprising I guess from such a tireless 24/7 defender of corporate behaviour to run to the defence of a greedy financial sector stuffing it's pockets while using it's immense clout with governments to have the taxpayer pay for the damage when things go wrong ( too big to fail...). That's what Big Finance has to do with taxation, government debt and inflation as you no doubt know very well. Bit rich don't you think that they will always argue how they couldn't possibly foresee how disastrous their shortsighted greed based policies would pan out in the long run, yet they expect us to continue to believe their predictions about what the future has in store for us . I say time to start thinking for ourselves and stand up to those basically telling us to be good little mushrooms and be content to be kept in the dark and fed sh.t.
          electronx16
          • 3 Years Ago
          @Marco Polo
          What's that EZEE, do you reckon there are commentators out there posting under different nicknames? Why that would be an excellent method to astroturf oneself...
          EZEE
          • 3 Years Ago
          @Marco Polo
          @PR I try to be open minded, and believe in diversity of thought... Marco, right or wrong, has opinions, just like, you Dan (hi Dan).
      Marco Polo
      • 3 Years Ago
      Good heavens, who would have thought that the opinions of market analysts like Morgan Stanley's Adam Jonas, would not be welcomed by 'Green Car' enthusiasts? Market Analysis is, at best, a very inexact science. Predicting the economic future and profitability of trading conditions is extremely complex and very difficult. Thousands of different factors are applied to the modelling, and each of them has several interpretations. No matter how hard analyst works he will get it wrong a percentage of the time, (sometimes quite spectacularly). The most difficult companies to analyse are those with lot's of intangible assets, especially companies producing innovative, idealistic products. In the end it comes down to guesswork, maybe a little better informed, and better educated guesswork than the average person outside the industry, but still just guesswork. Complicated modelling and extensive research can help, But sometime over-complicates obscures the obvious! The European economic meltdown can't be discounted. The absolute dependence by Tesla on it's CEO, Elon Musk, is a real weakness. The fact that he is his own corporate governance officer, is another concern. Daimler 9% ownership and Toyota's overtures to form a Renault/Nissan type alliance, could be interpreted as an indication that Elon Musk maybe selling out, or then again, not! Who can tell? Don't misunderstand me, without men of vision and rare talent in command like Elon Musk, no great enterprise could ever reach it's full potential. Analysts like Adam Jonas often communicate their findings in confusing insider jargon, with the assumption that the ordinary reader is fully conversant with all the background information. Often even experienced financial journalists misunderstand the context. Adam Jonas views auto-manufacture as a business. In contrast, most ABG readers see the promotion of EV's as a passionate cause. Adam Jonas is paid to be cautious, he's not paid to be a passionate believer. I have spent many years investing in EV development and other environmental businesses. Not a fashionable pursuit in the world of conservative capital investment! Most investment professionals see the risks as simply not worth the losses. It's OK to be passionate with your own money, but when you are responsible for other peoples money, it pays to be very cautious. Analysts provide information, often contrary, but information. Speculators abound, the EV industry has experienced it's fair share of losses and failed enterprises. Auto-manufacture is a traditionally difficult industry to attract capital investment. I really want Elon Musk to succeed, I've always been impressed by his highly detailed knowledge of all the important aspects of the enterprises he controls. But in reality, auto-manufacture is consolidating and rationalising. Tesla's task will not be as easy as some imagine.
        EZEE
        • 3 Years Ago
        @Marco Polo
        Hey Marco! I largely agree, but I can understand the annoyance of those who read his spring review (yay, $70 a share) and then a few months later, checking the Wall Street Journal, seeing the same guy rattle off a different review. Obviously things change, but this is a fairly short turn around for such a change. In some cases, such as with a parmaceutical company and a new drug, this can happen due to and FDA warning on that drug that was supposed to make billions. However here...he is talking about increased efficiencies with hybrids and ICE engines. What the heck happened since this spring where that changed? Cruze Eco, check. Hyundai Elantra, check. Focus. C-Max, and C-Max Energi were all out, or planned.
        JeremyD
        • 3 Years Ago
        @Marco Polo
        I am by no means a market expert, but from my point of view, what does Morgan Stanley's Adam Jonas (or any other analyst) stand to gain from disclosing this information other than to manipulate the market in one way or another? The "information" they provide only serves to add to market volatility based almost entirely on speculation. Consider their history! These people are nothing more than fortune tellers, how can people continue to take them seriously?
          PR
          • 3 Years Ago
          @JeremyD
          Yet another case of EZEE can't read. From your own source: "Indiana University law professor Donna M. Nagy, an expert in securities law, is scheduled to testify at Thursday afternoonā€™s hearing and will tell members of the Senate homeland security panel that she thinks Securities and Exchange Commission Rule 10b-5 already prohibits lawmakers from making insider trades." Here is what Sen. Joseph I. Lieberman said about the same the SEC Rule 10b-5 banning insider trading: ā€œ[it] clearly covers members of Congress and our staff,ā€ So much for "immune from insider trading rules"
          PR
          • 3 Years Ago
          @JeremyD
          EZEE -- are you under the failed impression that I was disagreeing with Marco Polo's post where he said: "Members of congress are not immune from 'insider trading' laws. nor are government employees, or even the President. (although he can get his successor to Pardon him)." I'm absolutely agreeing with him. In fact I gave him a +1. What is wrong with you that you can't even see when both Marco Polo and I are both telling you that you are wrong? Here is an idea for you, READ YOUR OWN SOURCE! It shows that a University Law Professor, a Senator who is subject to Rule 10b-5, Marco Polo, and I all are telling you that you are wrong. I was about to say something more, but since Marco Polo keeps saying there are better ways handle you, I'll let him have the first chance to straighten you out. If he is unable/unwilling, I'll do it my way.
          JeremyD
          • 3 Years Ago
          @JeremyD
          @Marco "Analysts have little effect on the market." Agree to disagree then. BTW Im not against taking advantage of the situations these clowns create. Picked up TSLA at a 10% discount this week. Perhaps Tesla and the market will help buy me one of their fine cars.
          EZEE
          • 3 Years Ago
          @JeremyD
          I cant speak for Morgan Stanley, but congressmen are immune from insider trading rules. So prior to passing legislation, they start investing. They always well outperform, the markets.
          Marco Polo
          • 3 Years Ago
          @JeremyD
          Ezee, Members of congress are not immune from 'insider trading' laws. nor are government employees, or even the President. (although he can get his successor to Pardon him).
          EZEE
          • 3 Years Ago
          @JeremyD
          @PR why would a professor need to testify that she 'thinks' they are not immune from these laws? Could it be that there IS a problem with the law, or it's enforcement? Do college professors rule on law, or is that judges? Your anger and hatred of your betters is starting to cloud your posts. Take a deep breath, relax, and realize you just backed up Marco, due to your hatred of me. But thanks for angrily reading the link I posted. I can see you, in fits of rage, drool coming down the side of your mouth as you spit with rage.
          Marco Polo
          • 3 Years Ago
          @JeremyD
          @JeremyD Analysts have little effect on the market. There are thousands of analysts, mostly publishing conflicting observations. Like journalists or racing tipsters they add to the knowledge pool, but in the end each investor, each banker, each fund manager must decide for themselves. If there were any certainties in the capital market, it would be a capital market!
          EZEE
          • 3 Years Ago
          @JeremyD
          @Marco Actually....: http://www.washingtonpost.com/politics/bill-to-ban-insider-trading-in-congress-is-suddenly-popular/2011/11/30/gIQAn193DO_story.html And @everyone else - the link is from the washington post...so no screaming...
          JeremyD
          • 3 Years Ago
          @JeremyD
          Oh im sure this guy had someone shorting TSLA for him before he published his "pre-vision" into the future.
        Dave D
        • 3 Years Ago
        @Marco Polo
        To me, this isn't about whether Adam Jonas is an analyst or a "passionate believer" in EVs. It has been proven time and again that a monkey throwing darts at the Wall Street Journal stock listings does as well as these "analysts". Therefore the only purpose of these analysts is to make money for Morgan Stanley be making statements that influence clients and investors. When a Goldman Sachs or a Morgan Stanley provide actual services that provide liquidity or placements (IPOs, etc) then they serve a true purpose. When they are playing the "Analyst" game, they are just another casino trying to influence the bets of people gambling on the stock market. And like any "House" in gambling....they find a way to take their share off the top. In the interest of full disclosure, my girlfriend was an analyst for Morgan Stanley for 6 years. Only Donald Trump can find a way to lose money being "The House" LOL
          Dave D
          • 3 Years Ago
          @Dave D
          No Marco, I'm not. I'm just being lazy and not typing out all the cause and effect. When a company like MS has one set of people providing "analysis" then their brokers make more money because people react and buy/sale due to that "analysis"....same result. I don't care how many people at MS are involved to make the wheel go round, I just care that they make it spin and then collect money as people react.
          Marco Polo
          • 3 Years Ago
          @Dave D
          Dave D You are mistaking analysts for brokers or investors. Analysts simply provide speculative information. No different from journalists. In factthe majority of journalists rely on analysts for information. The factors that govern the world capital markets are way beyond the control of analysts, who are only observers of events not controllers.
      Spec
      • 3 Years Ago
      "Morgan Stanley is now taking an overall dismal view of plug-in vehicles. Instead of an 8.6 global market share by 2025, Morgan Stanley now predicts just 4.5 percent" Well that is interesting. Exxon came out today and said half the cars on the road will be hybrids by 2040. Exxon said that. Exxon. That is the oil company that has been the most reluctant to admit anything about peak oil. Oil companies like Shell, Chevron, and Total have long been warning of eventual oil shortfalls. http://www.buffalonews.com/business/article666169.ece
        EZEE
        • 3 Years Ago
        @Spec
        Hi Spec! Wouldn't hybrid sale increases potentially back up the MS comments though? If I am thinking of a Volt or a Tesla, and I buy the volt...? I think the one factor for the longer term that MS isn't addressing (and their comments I do not believe we're for long term) was potential break throughs. Let's say that the solid state battery thing comes through. They are reletively cheap, do not degrade at a fast rate, and new chargers chappie them quickly. At that point, it is game over for the ice an any area with electricity. 600 miles on a charge? Quick charge? Me running around with my camo electric cord, stealing electricity? Any electric car buolder's stock doubles overnight.
      • 3 Years Ago
      Have any of the commenters read Jonas' original analysis? It was wildly optimistic, with a valuation based on rose-colored projections piled on one another. In an interview (still available on line), he largely could not defend the $70 number. That he was able to weather the backlash and stay employed either speaks well of his internal MS relationships, or poorly of his boss's attentiveness. The reality is that a $44 share price for Tesla as an actual automobile production company and not just an enthusiastic promise would be a great accomplishment for Musk's company. The current valuation is so incredibly high that $44 might seem like a disappointment.
        EZEE
        • 3 Years Ago
        I imagine there are angry investors right now that listened to the first pronouncement, and now see this. A big giant, 'You D!ck!' yesterday....
      Sonny J Ong
      • 3 Years Ago
      "Morgan Stanley is saying, no matter how good Tesla's EV are, the time just isn't right." When is it going to be the right time? When we are all dead? Great timing Morgan Stanley, you aren't hiding anything. Also I love this one, "Morgan Stanley now predicts just 4.5 percent because traditional gas-powered cars are getting so much more efficient". ICE cars are not even close to the efficiency of EVs. Morgan is such a tool.
      solas
      • 3 Years Ago
      So ... the real conclusion is that an analyst's assessment at any given time is worthless ...
      Spec
      • 3 Years Ago
      Stabbed in the back by their own underwriter?
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