Tesla Down 57% YTD, Analyst Weighs In On Where The Stock Goes From Here

Tesla, Inc. TSLA shares are trading at a two-year low amid their recent widespread sell-off. An analyst delved into the stock price movement and what lies ahead for the electric vehicle manufacturer.

The Tesla Analyst: Morgan Stanley analyst Adam Jonas maintained an Overweight rating and $330 price target on Tesla shares.

The Tesla Thesis: Tesla shares crossed below the $500 billion market cap threshold on a basic share count basis on Wednesday, marking the first time since Nov. 23, 2020, it fell below the mark, Jonas said.

Using a market cap of $500 billion and adjusting to enterprise value for net debt, Tesla is currently trading at almost a 40% lower multiple on 2025 EBITDA compared to the last time the stock fell below a $500 billion market cap, he added.

Although difficult to qualify, Tesla’s recent selloff has elements of both uncertainty around its fundamentals and surrounding other factors such as Musk’s strategy and actions related to Twitter, the analyst said.

See Also: How to invest in Tesla (TSLA) stock

As Tesla has pulled back to Morgan Stanley’s bear-case price target of $150 and threatens to break below the level, Jonas said he sees an attractive entry point for investors. The analyst expects Tesla to widen its gap to competition, as it leverages its cost leadership and vertical integration in a deflationary electric vehicle environment.

The year 2023 will likely be a tough year for both legacy OEMs and pureplay EVs, he added.

“Due to its scale/cost leadership, lack of financial debt and self-funding/free cash flow generation, we see Tesla as relatively lower risk vis-à-vis other EV pure plays as well as vs. the EV efforts of legacy OEM,” Jonas said.

The analyst expects Tesla to sell 1.8 million cars in 2023, but sees pricing as a dark horse due to slowing economic growth and decelerating EV demand.

Negative demand impact from Twitter-related sentiment and tailwinds, if any, from a taxpayer-funded stimulus, combined with industry-specific and macroeconomic drivers such as consumer outlook and Fed policy could add more volatility to the stock, Jonas said.

Tesla Price Action: Tesla closed Friday’s session down 4.72% to $150.23, according to Benzinga Pro data.

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