Tesla Stock Price Will Surge 50% To $500, Morgan Stanley Predicts

Morgan Stanley sees a big uptick in Tesla’s stock if the Cybertruck becomes successful.

The stronger “bull case” for Tesla came Thursday from Morgan Stanley analyst Adam Jonas who predicted the share price will touch $500 if the Cybertruck turns successful and the new factory in China does well.

Morgan Stanley’s new bull case on Tesla suggests a 50 percent increase from current stock price, reports CNBC. Nevertheless, Morgan Stanley did not make any change in the “base case” price target of $250 on Tesla share.

Analyst Jonas said his “the optimistic scenario” is based on sales volumes of the future. The rough calculation premises Tesla selling 100,000 Cybertrucks by the end of 2024 at an average price of $50,000.

Jonas has been bullish on Tesla for long and maintains a positive outlook on electric vehicles.

Tesla CEO Elon Musk had projected that the truck has 250,000 pre-orders. Jonas is assuming at least 40 percent of them would translate into an actual sale by 2024, per Bloomberg.

The analyst said the stock will boom if Tesla’s Gigafactory in China hits a production rate of 450,000 units per year by 2024/2025. On Thursday, Tesla stock was up 0.7 percent in after-hours trading from the close of $330.37 a share.

Market perception of Tesla changing

The analyst sees the bull run calibrating over the perception of Tesla as an auto brand. He said: “We are not bullish on Tesla longer term, over time, we believe Tesla could be perceived by the market more and more like a traditional auto OEM original equipment manufacturer; we are prepared for a potential surge in sentiment through 1H20 but question the sustainability."

Overvalued yet strategically undervalued

In June, Jonas had said, “Tesla is fundamentally overvalued, but potentially strategically undervalued.”

In the latest report, Jonas also defends the retention of the base case scenario saying it no longer sees Tesla as a high-flying Silicon Valley tech stock. The perception is moving towards that of a viable automaker.

The note also shares some bearish concerns that may confront the Tesla stock.

“We are cautious on Tesla’s prospects in China, given geopolitical/CFIUS concerns, we believe that the Model Y will likely cannibalize a significant amount of demand for the Tesla Model 3, and see Berlin Giga as the first step for Tesla to ultimately be seen by investors as an auto company rather than a high growth tech firm, with valuation reflecting that at some point,” Jonas said.

Alaska offers Tesla resources to produce Cybertruck

Meanwhile, reports said Alaska governor Governor Mike Dunleavy invited Tesla CEO Elon Musk to consider using the state’s resources to build the company’s premium vehicles.

The governor also mentioned the Cybertruck in a twitter message. But Tesla is yet to announce details of plant locations where it would produce the electric pickup truck.

The Teslarati report also notes that Tesla facilities have served as potential economic boosters to many areas where they came up. Examples include Reno in Nevada, and maybe Alaska wanted to replicate that economic boom in its region.