On the Dash:
- Morgan Stanley downgraded Tesla to “hold,” citing stock at full valuation despite Musk’s AI and robotics ambitions.
- Tesla shares trade at 210x projected earnings, the second-highest in the S&P 500, with a new $425 price target implying a 6.6% drop.
- EV sales are expected to decline 12% in North America next year, while Optimus robot initiatives are priced into current stock levels.
Morgan Stanley downgraded Tesla to a “hold” rating on Monday, citing concerns that the EV maker’s stock already reflects its ambitions in robotics and artificial intelligence. The move marks the firm’s first rating cut on Tesla since June 2023.
Tesla shares trade at roughly 210 times projected earnings over the next 12 months, making it the second-most-expensive company in the S&P 500, trailing only Warner Bros. Discovery at 220 times earnings. Analyst Andrew Percoco set a new price target of $425, implying a 6.6% decline from Friday’s close. Notably, Tesla shares fell as much as 3% Monday, trading around $441.
Percoco also noted that Tesla’s non-automotive initiatives, including its Optimus humanoid robot, are largely priced into the current stock value. EV sales in North America are projected to fall 12% next year amid a broader industry slump.
Tesla has largely shrugged off a slide in profits this year as CEO Elon Musk has emphasized artificial intelligence, robotics, and self-driving technology. The stock remains volatile, gaining roughly 10% this year after rising 63% in 2024 and 102% in 2023, compared with a 16% increase in the S&P 500 index over the same period.
Current analyst coverage lists 28 buy ratings, 19 holds, and 16 sells, with an average price target of $388. Morgan Stanley’s downgrade reflects the view that Tesla’s lofty valuation limits upside, despite the company’s ongoing innovation in AI and robotics.
