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Tesla shares have lost almost 50% since the start of the year.
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Morgan Stanley (NYSE:MS) sees this as a buying opportunity.
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JP Morgan believes the stock could once again lose half of its value.
Tesla Inc. (NASDAQ:TSLA) shares have been highly volatile since the start of the week, beginning with a steep 15% drop on Monday, followed by rebounds of 3.79% and 7.59% on Tuesday and Wednesday.
Despite these recoveries, Tesla shares hit a new low of $217.02 during Wednesday’s session, a level not seen since October 2024.
At this low, TSLA was down over 55% from its all-time high on December 18, 2024, and more than 46% since the start of the year. Given this sharp decline, one might wonder if the market’s reaction has been excessive—and if Tesla now presents a buying opportunity.
This question becomes even more relevant from a technical perspective, as the 100- and 200-week moving averages were tested at this week’s low before being quickly reclaimed. These levels, at $245 and $248, now serve as immediate support.
To gain better insight into Tesla’s outlook in the coming weeks, we can examine the latest forecasts from Morgan Stanley and JP Morgan, which offer radically opposing views.
Morgan Stanley: AI and Robotaxis Will Transform Tesla
Morgan Stanley analyst Adam Jonas remains highly optimistic. Earlier this week, he predicted that Tesla could reach $800 per share within the next 12 months, implying a potential upside of more than 222% from Wednesday’s closing price.
Jonas views Tesla’s recent pullback as an ideal entry point, describing the company as an "AI composer incarnate" poised to evolve from a car manufacturer into a diversified technology powerhouse.
Morgan Stanley’s bullish $800 target is based on three key factors: advances in AI and autonomy, expansion in the energy sector, and the potential of robotaxis. Regarding robotaxis, the bank projects a fleet traveling a billion miles per day by 2030, with 7.5 million robotaxis in operation by 2040. The next major update on these projects is expected later this year with Tesla’s Robotaxi and AI/Humanoid Day.
However, it’s important to note that Morgan Stanley’s $800 target is the most optimistic scenario. The bank’s base case projects a rise to $430, which still suggests a strong potential upside of over 73%.
JP Morgan: Musk’s Role in the Trump Administration is Hurting Tesla’s Image
JP Morgan takes a far more pessimistic stance. The bank announced yesterday that it had cut its Tesla price target from $135 to $120—roughly 52% below Wednesday’s closing price.
JPM’s primary bearish argument is the deteriorating brand image of Tesla due to CEO Elon Musk’s controversial political role in Donald Trump’s administration.
Musk’s outspoken political positions and his involvement in mass layoffs of civil servants through the Department of Government Efficiency, which he oversees, have significantly damaged Tesla’s reputation. This has led to a surge in used Tesla sales and even prompted some owners to remove the Tesla logo from their cars.
Meanwhile, a CNN survey released Wednesday found that 53% of Americans view Musk negatively, while 35% have a positive opinion and 11% are neutral.
JPM also highlighted that Tesla’s European sales are under significantly more pressure than its U.S. sales due to Musk’s comments on the war in Ukraine, U.S. involvement in NATO, and far-right political movements. New Tesla vehicle registrations in Europe reportedly fell by 50% in January compared to the previous year.
The bank remarked that it is "hard-pressed to find a similar case in automotive history where a brand has lost so much value in such a short period."
What Do Valuation Models Say?
When it comes to valuation models, Tesla’s stock does not yet appear undervalued, even after recent sharp declines.
InvestingPro’s Fair Value estimate, which synthesizes 12 recognized valuation models for Tesla, currently stands at $251.15—just slightly above Wednesday’s closing price.
Source: InvestingPro
However, this valuation does not account for future projects like robotaxis and humanoid robots, which underpin Morgan Stanley’s ambitious forecasts.
Conclusion
Tesla’s brand image and Elon Musk’s reputation have taken a hit, potentially weakening sales that were already showing signs of slowing. Turning things around may prove challenging.
However, it would also be unwise to underestimate Musk’s ability to influence Tesla’s stock price. With 2025 likely to bring major advancements in robotaxis and humanoid robotics, the future remains uncertain—but full of possibilities.
Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.