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Morgan Stanley analyst Adam Jonas provided a bearish outlook for Tesla stock as the risks in U.S.-China relations are rising. TSLA stock is down today.
Tesla (TSLA) stock had risen above the $1,000 mark on Wednesday. This generated quite a reaction in the markets. This morning during the pre-market, Tesla stock prices had a valuation of just over $180 billion. This is more than five major automakers put together.
At the time of filing this report, Tesla (TSLA) stock prices were at $945 (-2.86%).
Tesla Stock Price Down as TSLA Gets a Bearish Outlook from Morgan Stanley
Sources say that Morgan Stanley analyst Adam Jonas gave a bearish outlook for Tesla stock as the risks in U.S.-China relations are rising. He further gave the stock the “underweight” classification. This is down from its “equal weight” classification before now.
Adam alluded to the fact that despite the Tesla (TSLA) stock price rally, the U.S.-China trade tensions won’t go away. He also emphasized the fact that Tesla was more likely to be affected than other carmakers. This is due to its market presence and the Shanghai manufacturing facility.
Jonas also made mention of the fact that other technology firms are also gearing up in the electric vehicle space. Firms such as Nikola (NASDAQ: NKLA) could potentially rival Tesla (TSLA). These firms don’t have the Chinese exposure that Tesla has.
The price cuts in China and the U.S. also weighed heavily on Adam’s opinion. He wrote:
“Risk to short-term pricing dynamics represents the entirety of our price target change today.”
Adam reviewed his price outlook for Tesla (TSLA) stock prices from $680 to $650. This is a conservative estimate of stock prices with an eye on the supply side of the stock.
Goldman Sachs also downgraded Tesla (TSLA) stock albeit the downgrade wasn’t as severe. The rating for the stock prices was moved to neutral. Sources say that Goldman analyst Mark Delaney was still slightly optimistic about Tesla. His positive outlook though is for the mid to long term. Model Y manufacturing issues are a cause for concern though in the short to mid-term. Price-cuts have also been factored in.
Delaney’s recommendations have been set to “hold”. This shows that for Goldman, Tesla’s future is still bright. The immediate challenges have to be dealt with and solved though. Delaney also named his price target of $950.
Both Analysts Are Right
These somewhat diverging views could both be right. Morgan Stanley is right considering the short term factors that could affect Tesla’s (TSLA) business. The only factor that could work in Tesla’s favor is a Democrat President last year. The odds of that happening are 50-50.
On the bright side, Goldman sees promise in the world’s best-selling electric vehicle and its eccentric CEO. That at least should count for something.