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Tesla stock: Musk entry into politics puts $500 bull case in play - Morgan Stanley

Published 11/12/2024, 06:34 AM
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Investing.com -- Elon Musk's foray into politics could have strong implications for Tesla (NASDAQ:TSLA)'s growth trajectory and valuation, potentially supporting a $500 bull case for the stock, according to Morgan Stanley (NYSE:MS).

Musk's public endorsement of President-elect Trump has positioned him as a prominent ally in the incoming administration, sparking Tesla's shares to rally over 40% in recent days, now trading around $350, well above Morgan Stanley's $310 price target.

Analysts at Morgan Stanley note that Musk's political connections might expand Tesla's "role in the U.S. renewable and autonomous industrial complex," fueling investor enthusiasm for its potential in sectors beyond automobiles.

However, while Tesla has garnered much attention, it still faces skepticism.

"Based on our discussions, at least, Tesla is very frequently excluded from potential paths of expression in a portfolio" due to its reliance on car sales for the bulk of revenue, Morgan Stanley writes.

They argue that Tesla's potential, similar to transformative moves by companies like NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL), and Amazon (NASDAQ:AMZN), might be underestimated.

Morgan Stanley outlines key assumptions supporting its 2030 $500 bull case, which includes contributions from Tesla's auto, energy, and network services segments.

Their projections involve Tesla achieving 8 million car units sold annually by 2030, 400 GWh in deployed energy storage systems (ESS), and a $146/share contribution from Tesla's network services, encompassing software, services, and full self-driving technology (FSD).

Furthermore, Morgan Stanley envisions Tesla's foray into ride-sharing and third-party battery licensing as major growth drivers.

Notably, Morgan Stanley's $500 bull case excludes valuation for Tesla's humanoid robots. They speculate that each 1% of U.S. labor potentially replaced by Tesla's humanoid project, Optimus, could add around $100 per share.

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