Morgan Stanley says Tesla (TSLA) could tag $150 before year end

In an investor note released on Monday, Morgan Stanley analyst Adam Jonas said his bullish overall view of Tesla (TSLA) may have to wait on the back burner while his bearish scenario for the stock unfolds. Jonas said $150 seems more likely before the end of the year. TSLA  stock ended Monday’s session down 2.6% at $190.95. Despite the fact that he himself has a $330 price target on the EV leader, the analyst said CEO Elon Musk’s focus on Twitter has greatly affected confidence in his leadership and the brand overall.

Tesla stock news

“While it is not possible to quantify any potential impact on Tesla shares,” wrote Jonas, “we note that the risk is clearly top of mind from our discussions across a range of investors.”

Since Musk’s official takeover of Twitter several weeks ago, he has had a public hand-on approach at the social media giant. While firing about half the staff and the entire top echelon of executives, Musk has publically-feuded with top engineers as he seeks to move the platform to a highly subscription-based model. All the while, Musk’s focus on his new company is making Tesla investors wary of the leadership vaccuum at the car maker.

Another worry is that Musk will use his other companies to bolster Tesla, which as a private company now bears at least $13 billion in debt from the buyout process. This happened over the weekend as news emerged that his private company SpacEx would be spending upward of $100 million on Twitter advertising following an exodus of advertisers after Musk’s takeover.

Jonas also suggested the price cuts and slowdown in sales growth in the Chinese market as that economy deals with recurring covid shutdowns is another headwind for investors sentiment. Despite the positive drop in CPI witnessed last Thursday, Jerome Powell’s Federal Reserve is still expected to keep raising rates until inflation is defeated. Jonas said this would be another worry for investors expecting the stock’s valuation multiple to keep compressing into year end.

$150 would provide Tesla stock with a 12.5x EV/EBITDA multiple that would bring sidelined investors back to the fold, according to Jonas’ view.

Tesla stock forecast

Nearly all tech and growth stocks bounced much higher last Thursday after the CPI print. Tesla stock in fact almost exactly matched the Nasdaq’s wild 7.3% advance in that session. Unlike Nvidia (NVDA) stock, however, TSLA has been unable to capitalize on that hammer candlestick in the same way since it has Musk’s saga with Twitter detracting from its story. With Monday’s sell-off, it seems that investors have already forgot about the rumored Fed pivot.

At the beginning of the month the 50-day moving average crossed back beneath the 100-day moving average for the first time since August 30. The last time this happened, it last for three months. Based on the fact that the Relative Strength Index (RSI) has not been showing much strength for two months, anyone can see why investors are not ready to jump back into the fray. Short-term support remains at the November 9 low at $177.

TSLA 1-day stock chart