Introduction: A Rollercoaster Year for Tesla
Tesla’s 2024 Outlook According to Morgan Stanley’s Biggest Bull. Tesla’s stock has been on a rollercoaster, experiencing a 65% drop in 2022, followed by a remarkable surge of over 110% in 2023.
As the electric vehicle (EV) giant looks ahead to 2024, Morgan Stanley analyst Adam Jonas, Wall Street’s most optimistic Tesla bull, sheds light on the key drivers that will shape the company’s trajectory. Read more in our latest post.
Beyond Cars: Navigating a Volatile Landscape
Jonas anticipates 2024 to be “another volatile, idiosyncratic year” for Tesla. In this context, ‘idiosyncratic’ suggests that factors beyond the automotive sector will heavily influence the stock.
Despite no high-volume product releases, Tesla faces increased competition in the EV market. The introduction of electric vehicles like the Chevy Blazer and Equinox by General Motors poses challenges to Tesla’s market dominance.
Unconventional Catalysts: Robots, AI, and Self-Driving Licensing
While traditional automotive metrics might not entirely dictate Tesla’s stock performance, Jonas identifies three unconventional drivers for 2024.
Firstly, he points to Tesla’s robot, Optimus, designed for repetitive, dangerous, and unattractive tasks. Secondly, the AI powerhouse, Tesla’s Dojo computing platform, could find applications beyond autonomous driving, potentially diversifying Tesla’s revenue streams.
Lastly, Jonas envisions Tesla supplying battery or autonomous driving technologies to other automakers, leveraging Elon Musk’s hint at licensing self-driving tech.
Valuation Breakdown: Bullish Price Target and Market Speculation
Jonas, the most bullish analyst on Wall Street, assigns a buy rating to Tesla with a $380 price target. He breaks down the valuation as follows:
- Car business: $86/share (based on selling 7.4 million cars in 2030).
- Self-driving robotaxi business: $82/share.
- Software business: $115/share (includes self-driving technology sold to Tesla drivers).
- Energy business: $48/share (encompassing solar roofs and battery storage).
- Additional value: selling insurance and technologies to other car companies.
Market Speculation: Widening Gap in Price Targets
The divergence in Wall Street’s price targets for Tesla reflects the difficulty in valuing the EV leader. Jonas’s optimistic $380 target contrasts sharply with the top five brokers average $340% share, implying a market capitalization of about $1.1 trillion.
In contrast, the bottom five brokers average $120% share, suggesting a market cap of around $380 billion. This $220 bull-bear spread represents a substantial 85% of Tesla’s current stock price and a market capitalization gap of approximately $700 billion based on the outstanding shares.
Conclusion: Navigating Uncertainty with Optimism
As Tesla embarks on 2024, the path remains uncertain, marked by volatility and unconventional catalysts. Jonas’s bullish outlook, driven by robots, AI, and potential partnerships, adds an optimistic perspective to Tesla’s narrative.
The wide range of price targets underscores the challenge Wall Street faces in valuing the EV giant, mirroring the complexity of an industry leader whose influence extends beyond traditional automotive boundaries. Know more