Morgan Stanley Adds Tesla To Its List Of Secular Growth Stocks

4 years ago Johnna Crider 0 Comments
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CNBC has reported that Morgan Stanley has added Tesla to its list of “secular growth stocks,” which is the investment firm’s list of 35 companies that it believes will “grow strongly well into the future.” It doesn’t matter how weak or strong their respective industries are, they should grow. Each of these companies are expected to have compound annual growth rates of 10% for earnings, revenue, or both.

For those who don’t know what “Secular Growth Stocks” are, they are companies that Morgan Stanley believes have sustainable competitive advantages, will see strong market share gains, and benefit from strong pricing power. Just note that this list and forecast came out before the Cybertruck reveal. We’ll have to wait to see if that changes things in either direction.

Close followers of Tesla stock, or just the company in general, know that Morgan Stanley has been all over the map on Tesla.

If we go back in time to an article by CNBC in 2017, we can see that Morgan Stanley believed that Tesla’s car population would triple by the end of 2019. By 2040, Adam Jonas of Morgan Stanley estimates that Tesla will have nearly 32 million vehicles on the road.

However, back in 2016, Morgan Stanley predicted that Tesla would sell only 246,000 cars in 2020. The company sold 208,000 in the first three quarters of 2019, and the fourth quarter is expected to be its biggest.

Morgan Stanley’s Adam Jonas is apparently bullish on the new Cybertruck. He told Yahoo Finance that the new Cybertruck could turn out to be the “hottest, fastest-growing electric vehicle in the U.S. market over the next 3-5 years.” Other reasons for the support include Tesla’s current size and profitability.

The ironic thing to many Tesla fans is that the same person earlier this said that Tesla stock could go down to $10/share. This, as expected, tanked to stock price. The actual forecast was that it could go up to $391 or down to $10 within a year, but all the headlines were focused on the downside potential. We pointed out at the time (see link above) that such a wide range of possibilities made the forecast completely useless.

The Yahoo Finance video also points out that data has shown that consumers like trucks, and combined with the movement in the EV market, Tesla is pretty much poised for success.

Catching up to today, in a poll by Morgan Stanley, 31% of those polled were extremely disappointed in the Tesla Cybertruck. However, this isn’t really that surprising, since humans are predictable creatures, especially when it comes to new things. People don’t like change. Also, let’s be frank, there’s no positive answer possible in this poll!

One thing we know for sure, the Cybertruck is the hottest new thing for the Internet, and new wrap ideas are coming in every day. The Dubai Police has even gotten in on the wrap action.

Critics of Tesla often scream doom and gloom, to later have to change course or — gasp — acknowledge their first impressions and analyses were wrong. They are starting to resemble those end-of-times doomsayers, especially when it comes to innovative technologies that affect our day-to-day lives.

If we pull ourselves out of the world of stocks and take a good look around us — grounding ourselves into reality — we can see just how big this impact on our world really is. Think about it, we are now seeing electric vehicles from Tesla and Porsche race against each other at Nürburgring; everyone from police forces to chocolate companies to restaurants are showing wrapped Tesla trucks. We also have a new crossover version of the Mustang that closely copies a Tesla!

Tesla has challenged other legacy automakers, and they are now trying to meet those challenges, because they see they have to. Some may be having difficulties.

Ford has commented now that Madra’s tweet was “tongue-in-cheek” and was meant to show how absurd Tesla’s tow video was. Ford is not up for an actual head-to-head (or back-to-back) test on even ground. Wonder why …

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Johnna Crider

Johnna owns less than one share of $TSLA currently and supports Tesla's mission. She also gardens, collects interesting minerals and can be found on TikTok

Johnna Crider has 1996 posts and counting. See all posts by Johnna Crider