Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
Investing.com -- Morgan Stanley analysts believe that Elon Musk’s recent public communication "campaign" regarding his clash with President Donald Trump is "likely part of a planned strategy by Elon to achieve a specific goal with his approach designed to bring maximum public attention to the issue."
Despite the potential for "negative sentiment around Tesla (NASDAQ:TSLA)’s products/brand" due to Musk’s political involvement, Morgan Stanley (NYSE:MS) suggests this "would not have come as a surprise to company management."
The firm highlights that the "credit outlook and financial adequacy of the United States (budget deficit, national debt, etc) has elevated to a top priority for Tesla’s CEO."
Morgan Stanley argues that for investors who thought Musk was "back’ to focus solely on Tesla... no longer focusing on political or policy-related issues, the two are very much inseparable."
They point to a "Pattern recognition," indicating that investors "may be, yet again, dismissing how far Mr. Musk is willing to go as well as the resiliency to withstand criticism and financial pain."
Morgan Stanley anticipates that "If the discord between Elon Musk and the President were to continue or escalate from here," Tesla investors "should prepare for even more elevated volatility in the stock."
However, they maintain "sufficient confidence in the long-term vision of the company to reiterate the name as our ’Top Pick’ in U.S. autos."
The analysts reiterated their Overweight rating and $410 price target on Tesla, highlighting their belief that "Tesla’s capabilities in key areas of physical AI (AVs, humanoids and other form factors) including data, robotics, energy storage, compute, manufacturing and space/comms/networking/infrastructure offer growth and margin opportunities that greatly exceed those of the traditional EV business."
They conclude that they "struggle to think of any other company as well positioned as Tesla" in these critical areas.