Investing.com -- Tesla shares have declined 50% from their December highs and are down 45% year-to-date, but Morgan Stanley sees the drop as a “buying opportunity for an embodied AI compounder.”
“Tesla delivery data has been below expectations this year,” the analysts said in a note, citing “competition, an aging lineup and a buyers’ strike from negative brand sentiment and upcoming new product.”
The bank added that according to Bloomberg, “Tesla’s January sales were down 45% y/y (while overall Europe sales were up 37%).”
The firm also highlighted a slowdown in China, with “the latest weekly order estimates (for Feb 24-Mar 2) coming in at 11-13k (vs 15-17k the week prior).”
Despite weak sales, Morgan Stanley observed that investor sentiment tends to shift with Tesla’s stock price.
The bank wrote: “In December with the stock testing $500/share, the prevailing sentiment was that the company is an AI ‘winner’ with untapped exposure to embodied AI expressions such as humanoid robotics.
“Today with the stock down 50% our investor conversations are focused on management distraction, brand degradation and lost auto sales.”
Looking ahead, the firm expects volatility, saying “we see scope for the shares to test our $200 bear case and our $800 bull case within the next 12 months.”
Key catalysts include Tesla’s anticipated “robotaxi ‘unveil’ (we expect between June and August)” and an “AI/Humanoid day” showcasing Optimus developments.
Morgan Stanley maintains Tesla (NASDAQ:TSLA) as its “top pick” in U.S. autos, stating, “we see Tesla as a long-term generational compounder within our coverage.”