|Tesla higher after Morgan Stanley points to huge 'internet-of-cars' upside|
Nov. 18, 2020 7:47 AM ET|About: Tesla, Inc. (TSLA)|By: Clark Schultz, SA News Editor
Morgan Stanley upgrades Tesla (NASDAQ: TSLA) to an Overweight rating from Equal-weight.
That means analyst Adam Jonas has something to say this morning.
"Tesla is on the verge of a profound model shift from selling cars to generating high margin, recurring software and services revenue."
"Tesla has continued to develop its services/platform business to a level where we feel that it is appropriate for investors to consider to change how they model the company’s revenue and profit streams."
"The internet-of-cars opportunity is real and, in our opinion, is a prerequisite to unlock further upside to the stock."
Jonas math: Tesla auto is worth $254 a share, Tesla energy is worth $12 a share, the insurance business is worth $15 a share, a potential mobility/ride-sharing business is worth $38 a share, the software/network services adds up to $164 a share and Tesla's 3rd party supplier business is potentially worth $58 a share.
Jonas and team think that to value Tesla on car sales alone ignores the multiple businesses embedded within the company, as well as the long- term value creation arising from monetizing Tesla's core strengths, which are driven by best in class software and ancillary services.
The new Morgan Stanley price target on Tesla is $540 vs. $360 prior. Wall Street in general is a bit skittish on Tesla due to valuation.