"Tech-oriented investors" are driving Tesla Inc.'s (NASDAQ:TSLA) stock price higher without understanding the implications of running a car company, Morgan Stanley analysts said in a note Tuesday, as reported by Forbes.
The Tesla Analyst
Morgan Stanley's Adam Jonas has maintained his previous rating of "underweight" on the company's stock with a price target of $650.
The Tesla Thesis
Jonas noted that it is extremely unlikely for Tesla to justify its current stock price within the next decade.
Morgan Stanley forecasts Tesla to produce 2 million electric vehicle units annually for the next 10 years. At a stock price of $1,000, the automaker's stock is "discounting roughly 4 million units" by 2030, Jonas said, according to Forbes.
False Comparison With Tech Giants
Tesla's stock is largely being driven by investors who draw a false comparison of the company with established technology companies and ignore the set of risks that come with running a car company, Jonas suggested.
To be able to draw such a comparison, "one would have to consider (or ignore) significant inherent differences in Tesla's business model and capital intensity," the Morgan Stanley analyst wrote, according to Forbes.
"One must also take into account many of Tesla's business objectives face a degree of execution risk that may be significantly higher than many of the more proven/mature companies in this analysis."
GLJ Research founder Gordon Johnson similarly suggested on Benzinga's PreMarket Prep show earlier in the day that he was bearish on Tesla's stock.
TSLA Price Action
Tesla shares closed 0.75% higher at $1,001.78 on Tuesday. The shares traded nearly 0.5% lower in the after-hours session at $997.