Tesla downgraded to Underweight on China risks at Morgan Stanley
As previously reported, Morgan Stanley analyst Adam Jonas downgraded Tesla to Underweight from Equal Weight with a price target of $650, down from $680. He believes Tesla "deserves most of its market cap" as the world leader in electric vehicles, but he also thinks the recent run-up in the share price to over $1,000 may not reflect a number of important emerging risks that have the potential to impact both growth and profitability in a materially negative way, Jonas tells investors. In the nearer-term, he worries about risks to demand and pricing. Over the longer-term, Jonas said that among the many risks facing Tesla, he would "rank risks related to U.S.-China relations at the very top." Any potential deterioration of relations with China "could disproportionately impact Tesla" compared to other stocks he covers, said Jonas. His view is that Tesla shipments in China peak at just under 500,000 units by 2027 and decline from there, the analyst added, stating that he doesn't view China risks as being "in the price" of the stock at current levels.
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