Tesla, Inc.’s TSLA core electric-vehicle manufacturing business grapples with the prevailing industry downturn; nonetheless, under the astute stewardship of Elon Musk, the company has judiciously diversified its revenue streams, earning plaudits from an esteemed analyst at Morgan Stanley.
Robust Diversification Strategy:
Morgan Stanley’s Adam Jonas, in a resounding vote of confidence, reaffirms Tesla’s position as the firm’s premier choice in the U.S. auto sector, extolling the company’s diversification approach. “The company remains steadfast in its efforts to mitigate risks potentially impacting the core auto business…while channeling resources towards stationary energy, technological infrastructure, robotics, and other manifestations of artificial intelligence,” he asserted.
Evolving Landscape:
Jonas, with a bullish Overweight rating and a $310 price target for Tesla shares, underscores the imperative of stringent cost controls against the backdrop of a notable decline in Tesla’s stock value, which has plummeted by over 50% from its peak and lagged behind major tech giants in recent years.
Source: Benzinga Pro
Margin Challenges:
Forecasting a 2024 GAAP operating profit of $5.6 billion, Jonas dissects Tesla’s financials by isolating the impact of zero-emission vehicle credits and Tesla Energy operations. His analysis reveals a core auto operating profit of $2.2 billion, suggesting that a significant portion may stem from non-auto segments such as AI infrastructure, rather than the automotive division.
Tempering Expectations:
The impending Robotaxi Day event on October 10 sparks speculation and curiosity within the market. Despite muted expectations, Jonas anticipates the unveiling of the latest Full Self-Driving (FSD) iteration and a showcase of a fully autonomous ‘cyber-cab,’ albeit within a controlled environment at Warner Brothers studios. The absence of a permit for autonomous vehicle testing without a driver is duly noted by the analyst.
In premarket trading on Friday, Tesla shares experienced a marginal decline of 0.84% to $228.24, according to data from Benzinga Pro, indicative of investors’ cautious sentiment.
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