Tesla (NASDAQ: TSLA) is facing renewed pressure after Morgan Stanley’s Adam Jonas lowered his rating on the stock, shifting it from ‘Overweight’ to ‘Equal-weight’ on December 8.
Despite trimming his stance, Jonas raised his price target from $410 to $425, reflecting updated valuation models and long-term optionality tied to emerging business lines.
The shift comes as Tesla trades at $455, with pre-market action pushing the stock down 1.74% to $447.86.
Jonas’ revised view follows a full reassessment of Tesla’s sum-of-the-parts valuation, expanding coverage beyond its vehicle segment.
The latest model assigns formal value to the Optimus humanoid initiative, incorporates additional analysis on robotaxi deployment through a U.S. city-level autonomous framework, and revises assumptions around Tesla’s software-driven Network Services.
Those areas include recurring revenue prospects from Full Self-Driving subscriptions and long-run attach rates.
Weaker demand for EVs
However, the upward revisions in the non-auto businesses are countered by a weaker outlook for electric vehicle demand and Tesla’s energy segment, alongside the impact of potential dilution tied to CEO Elon Musk’s compensation structure. Jonas also sees downside risk to near-term earnings expectations.
“Tesla remains a clear global leader in electric vehicles, manufacturing, renewable energy and real-world AI and we continue to view it as deserving of a premium valuation. However, high expectations around its non-auto businesses and AI have brought the stock closer to fair value,” Jonas said.
The bank noted the company is trading at valuation levels that already reflect major long-term catalysts, particularly in autonomy and humanoid robotics. With consensus expectations likely to reset lower in the coming quarters, Morgan Stanley prefers to wait for an improved entry point.
Looking ahead, Jonas outlined a broad valuation range, from a bear case of $145 to an upside of $860, dependent on Tesla’s ability to scale robotaxis, deliver unsupervised autonomy, and commercialize humanoid robotics.
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