A key Tesla stock analyst returned a "top pick" designation to the EV giant late on Sunday after removing that status on Jan. 31 following a "mostly disappointing" fourth-quarter earnings report. Tesla stock has dropped about 30% since the end of January.
Morgan Stanley analyst Adam Jonas, a longtime Tesla bull, reinstated Tesla as his firm's "top pick" in U.S. autos on Sunday, noting that investors appear to be on a Tesla "buyers' strike." The result, declining 2025 vehicle deliveries, could create an "attractive entry point to our preferred embodied AI name," the note said.
"While the journey may be volatile and nonlinear, we believe 2025 will be a year where investors will continue to appreciate and value these existing and nascent industries of embodied AI where we believe Tesla has established a material competitive advantage," Jonas wrote Sunday.
Possible Tesla Catalysts
The Morgan Stanley analyst maintains a 430 price target on Tesla stock, representing nearly 50% upside compared to current trading levels, as well as a bull case for 800. Jonas wrote Sunday that "embodied AI" is the "driver for upside" on his 800 bull case.
Embodied AI is artificial intelligence that interacts with and learns from the physical world. It uses sensors to feed its machine learning process.
The analyst also believes potential Tesla stock catalysts include the scheduled June 2025 robotaxi service launch in Austin, a potential AI day, launches of lower-priced models in the second or third quarter as well as a "potential" third-generation Optimus humanoid robot unveil.
Tesla stock fell 4.4% to 272.04 during Tuesday's stock market action, hitting a new 2025 low of 261.84 and closing below the 200-day line. This comes after the stock swung as high as 303.94 early Monday before dipping 2.8% to 284.65. Tesla sank more than 13% last week.
TSLA swung as high as 303.94 early Monday before dipping 2.8% to 284.65. The stock sank more than 13% last week, but advanced 3.9% on Friday to 292.98.
Last week, Tesla began rolling out some more driver-assist functions in China, but not the Full Self-Driving in the U.S. The early read on Tesla's latest features, which should improve with more training, is that it's not yet on par with systems from rival EV makers. Even with a full-fledged Level 2 system, Tesla may struggle to charge much in China for FSD, which goes for $8,000 in the U.S.
On Wednesday, new Model Y deliveries began in China, with the U.S. and Europe to follow next month. The Model Y accounts for a large majority of Tesla's EV sales, so the refreshed version is the biggest possible growth catalyst for Tesla in 2025.
Tesla Stock Performance
Prior to Tuesday's stock market open, Tesla hit fresh 2025 lows on Friday, but rebounded at a key level. Concerns are mounting that Chief Executive Elon Musk's high-profile role with the Trump administration is causing serious deterioration in the EV giant's brand image in the U.S. and Europe.
Tesla stock in recent days broke below potential floors at the 325-360 price range and the 300 level. It is now fighting to hold the 200-day moving average.
The stock fell as low as 273.60 on Friday morning, marking a new three-month low and undercutting the 200-day line. However, TSLA shares bounced back for a 3.9% gain, snapping a six-session slide.
Shares dived 27.6% in February, beginning with a gap below the 50-day moving average. TSLA stock is 40% below the Dec. 18 all-time high of 488.54.
The market capitalization fell back below $1 trillion on Feb. 25 and was $915 billion as of Monday's close.
The 200-day moving average, now around 279, is crucial level of technical support.
Tesla stock has a 21-day average true range of just of 5.5%. The ATR metric is available on IBD's MarketSurge charting tool. It gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
Tesla stock ranks fifth in the 35-stock IBD Auto Manufacturers industry group. The stock has a 72 Composite Rating out of a best-possible 99. Shares also have a 91 Relative Strength Rating and an 84 EPS Rating.
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