How Wild & Useless Are Tesla Analyst Forecasts? Morgan Stanley Edition

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Morgan Stanley put out an updated forecast on Tesla stock [TSLA] in the past week. It included close to nothing of any use. Many in the media must have recognized it was useless, but they picked one part of it to focus on for their own fun and games. They picked the lower end of the financial institution’s Tesla stock price forecast and stuck with that for their own misleading (or useless at best) ramblings.

I think a chart from Refinitiv (h/t mulder1231) captures the overall point best:

Oh, I see, so the crystal ball shows the stock price could go up $190 or go down $190!

I don’t know how much people think Morgan Stanley’s analyses are worth, but I’d rather give my money to Aziz Ansari or Kevin Hart if I want a laugh.

Here, if you want to throw some money at someone, you can toss us some cash and I’ll provide you with high-quality, Wall Street–level forecasting below the image. (Actually, we do also email exclusives and early previews to subscribers from time to time.)

Here’s my forecast: If Tesla sells a lot of cars, Tesla’s stock price could go up to $400+ by this time next year.

If Tesla makes nearly every mistake in the books and not that many people want to buy its cars, its stock price will go down to $11 by this time next year.

There you go. Useful, right?

Of course that’s useless garbage and isn’t worth a cent (I hope you subscribed to CleanTechnica anyway), but that is essentially what Morgan Stanley’s memo offered, and the mass media was all over it. More specifically, they all but ignored the high end of the forecast and focused their laser-like simpleton minds on the $10 figure. OMG — if the sky falls, TSLA will go to $10!

Perhaps my favorite comment on the essentially useless Morgan Stanley analysis was this one from “Zaxxon,” who appears to be a Tesla Model 3 owner and soon Model X owner in Colorado: “Uhh, the update from Morgan Stanley is just as silly. Might as well summarize it as our one-year price target is ¯\_(ツ)_/¯.

By the way, if you want a little more value from the Morgan Stanley Tesla man, Adam Jonas, you can go back to Tesla’s August conference call last year and listen to this question from drama-jonesin’ Jonas: “There’s an argument that a fully autonomous car is essentially like a Terminator that is programmed to save lives in highly complex terrestrial environments and that this same technology with a few tweaks have some pretty obvious military capability. Do you see any risk that U.S. companies will ultimately not be allowed to operate weapons-grade AI-based technology in a market like China and vice versa?” (Hat tip to “Fact Checking.”)

Yes, seriously.​

Elon’s response: “Well, this has never come up.

“I wouldn’t call it weapons grade. It’s just, like, the car is trying to drive, and if anything, the autonomous cars will be pretty easy to bully because they would optimize so much for avoiding collision. So that will be more of a challenge than anything else is — as soon as somebody sees the car’s autonomous, they know they can, like, cut them off and the car is going to do everything it can avoid like a collision.

“So, it’s like, that will actually be probably a bigger challenge than anything else, but we’ve not encountered anything of the nature of what you’re saying.”

Perhaps Jonas didn’t like the answer, or just didn’t believe it. Actually, as in his Terminator question, Jonas’s main rationale for the $10 low-end stock price is that Tesla could have trouble selling cars in China even with the Shanghai Gigafactory up and running — the first Chinese factory to be fully owned by a non-Chinese company.

As I wrote last night, it can be a bit bewildering to watch a stock move very strongly on essentially no substantial change in information, and it did appear that TSLA took a big hit from the Morgan Stanley memo despite the fact that it was basically gibberish. Perhaps the reason was simply that fear, uncertainty, and doubt were blasted across media headlines and investors were indeed spooked or thought other investors would be spooked. Who knows? But I imagine that Morgan Stanley, despite all appearance, does know what it’s doing and was happy to see the stock price fall. Maybe.

It’s a thin line between thinking that Morgan Stanley’s Tesla team is full of morons or full of manipulators. Tesla Motors Club member and CleanTechnica commenter “Artful Dodger” provides a superb note summarizing Morgan Stanley guidance from not so far back that also 1) tanked the stock and 2) was completely off the mark:

“It was his ‘Note to Clients’ on the morning of the 2018Q2 production report that crashed the [share price] from $360 at Mon open to $300 by Fri close.

“Here’s the best part: in his note he wrote that ‘Tesla wouldn’t be able to produce 4K Model 3s per week until May 2019’ :cool: (where’s the a**hat emoji?)

Now [Jonas] spouts the line ‘TSLA is [blahblah] and Strategically Undervalued’.

“Clearly his (thus also MorganStanley’s) objective is to broker a buyout deal for Tesla, and rake in the fees. Jolly jokers of Wall St.”

In case you don’t follow very closely, Tesla started producing more than 4K Model 3s per week not long after that, and is now (in May 2019) well above that figure. Did Tesla ever really recover that $60 or so in share price from the incorrect forecast? Did people who wanted to get out for other reasons just use it as an excuse? Who knows? But one thing is clear: negative and incorrect forecasts like these, blasted all across the financial press, have consistently done one job quite well — spread fear, uncertainty, and doubt (FUD) about Tesla far and wide. Critics claim Tesla doesn’t always hit its forecasts. (What company does, by the way?) But I seldom see them or the financial press highlighting how tremendously wrong the critics of 2018 were. They consistently claimed that Tesla couldn’t produce the number of cars that it ended up producing, couldn’t make it to the end of the year without raising money (it did), didn’t have the production capacity Tesla said it would have, didn’t have the consumer demand Tesla said it had. The critics were massively wrong, yet the FUD sept into the public consciousness.

I’m not a fan of the FUD. I know that it hurts not only the stock price but also consumer demand. It seems that every Tesla enthusiast knows people who don’t follow the company closely at all but have picked up nonsensical thoughts here or there from all the misleading media coverage. They think Teslas are unsafe (despite the fact that they’re the safest cars on the road). They think Tesla is going bankrupt any day (despite the fact that it clearly is not and that claim has been made for 11+ years). They think that CEO Elon Musk is a crazy druggie (which he clearly is not). The FUD works.

That said, there should eventually be a boomerang effect. Eventually, loosely informed consumers will experience a Tesla, will have an open mind to learning a bit more about the company and its products from an owner they know, and will realize they’ve been scammed for months or years. Many of these people will place an order for the superior Tesla products and continue to spread the word — perhaps even more effectively than consumers who were never fooled by the FUD.

Many consumers still think you have to wait years for a Tesla. (You only have to wait a few weeks.) Many consumers still think a Tesla costs $70,000 or more. (Base price is now $35,000.) Many consumers will soon learn, or are learning right at this moment somewhere in a parking lot, that the info they picked up is out of date. What then?

We’ll see. In the meantime, recall that despite the nonsense you see from Wall Street and the financial press, the Tesla Model 3 was the 13th best selling car in the USA in the first quarter (supposedly, a bad quarter for the car), the Model 3 dominated the US luxury car market in that quarter, other automakers saw their sales collapse while Tesla’s sales rose 110% year over year, and overseas Model 3 shipments were just beginning at the same time.

In the end, no one really knows what the future of Tesla/TSLA is because no one really knows how many millions of customers will buy Teslas. Adam Jonas, despite all the wild headlines, kept Morgan Stanley’s price target at $230. He doesn’t have a clue.

Sadly, much of the market is still responding to shallow headlines, and rather then congratulate an obvious American success story in an age when there is so much desire to save manufacturing in the country (let alone launch new manufacturing giants), financial press talking heads are missing the beautiful forest for the weeds and ticks their Wall Street, Big Auto, and Big Oil friends brought into the forest. Such a shame.

Addendum: Here’s a nice addition to the story from “elsalle” on the Tesla Motors Club forum:

Inside the mind of Adam Jonas:
1. Encourage new company to take lots of debt, IPO etc. (with Morgan Stanley being one of the under writers). Encourage investors to buy the debt.
2. Once company takes on the debt, flip flop to unsustainable debt, restructuring.

Interested in buying a Tesla Model 3, Model S, or Model X? Need a referral code to get 5,000 miles of free Supercharging? Use ours by May 27: (or use someone else’s if they helped you more).


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Zachary Shahan

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.

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