Tesla stock is down around 19% since hitting a record high last month, but a top analyst just raised his price target while hiking the bull case scenario to $800 per share, with the EV giant's "network services" making up the largest bulk of the current value. TSLA shares fell Tuesday after advancing Monday.
Morgan Stanley analyst Adam Jonas on Monday increased his TSLA price target to 430 from 400, keeping an overweight rating on the shares, which remain a "top pick" for the firm. Jonas' price target represents 9% upside compared to Tesla stock's current market price.
The longtime Tesla bull wrote that TSLA's recent share price "appreciation has begun to discount the expanding 'surface area' between Tesla and physical AI including the company's natural advantages in terms of data collection, robotics, energy storage, AI/compute, manufacturing and supporting infrastructure."
"We still see scope for 2025 to be a year where the market's appreciation for Tesla's unique combination of skills can be further reflected in the multiple, offsetting the relatively well-known challenges to the FY25 EV market," Jonas wrote Monday.
Morgan Stanley's Valuation
The analyst expanded his value assumptions for the network services segment — which includes autonomy, charging, maintenance, software upgrades and media content — and the company's autonomous rideshare potential as areas where "Tesla has established a material competitive advantage."
For the 430 price target, Jonas values Tesla network services at $168 per share, or 39% of the total value target. Meanwhile, Jonas values Tesla's autonomous robotaxi service at $90 per share, one dollar more than his value for Tesla's core automobile business.
Jonas also increased his bull case for Tesla stock to $800, up from $600, on Monday. In this scenario, Tesla sells 7 million vehicles by 2030 with 26% gross margin. The auto business is valued at $130 per share in this scenario, with Tesla's ridesharing service making up a value of $263 per share, or 33% of the $800 price target. Jonas pegs Tesla's network services at $248 per share in his bull case.
"While autos still matter, we see embodied AI as the driver for upside to revised $800 bull case," Jonas wrote.
Tesla Stock Performance
TSLA jumped as high as 422.64 but fell 1.7% to 396.36 during market action on Tuesday, after advancing around 2.2% to 403.31 on Monday, testing its 10-week moving average.
The stock slipped a fraction to 394.74 on Friday, but did rebound from the 10-week line intraday. Tesla shares fell 3.8% for the week, dropping below 21-day line, even as the EV giant refreshed the popular Model Y in China.
Tesla stock gained 62.5% gain in 2024, virtually all of that in the fourth quarter, especially after President-elect Donald Trump's election win.
TSLA stock is on the IBD Leaderboard watchlist.
Tesla stock ranks first in the 35-member IBD Auto Manufacturers industry group. The stock has a 93 Composite Rating out of a best-possible 99. Shares also have a 97 Relative Strength Rating and a 78 EPS Rating.
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