The week got off to an excellent start for Tesla (NASDAQ:TSLA) investors. The stock saw out Monday’s session, 10% into the green, with the rally driven by a glowing report from Morgan Stanley analyst Adam Jonas.
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The analyst not only upgraded Tesla’s rating but also slapped a new Street-high price target ($400) for the shares. The reason for Jonas’ bullish take is down to the opportunity represented by Tesla’s Dojo supercomputer, its in-house-built and custom-made AI data center developed specifically to train the full-self-driving (FSD) system that sits in all Tesla vehicles. With various tailwinds at its back, Jonas reckons Dojo can add up to $500 billion to Tesla’s enterprise value.
Investors evidently thought that sounded great and piled in to load up. However, one prominent long-standing Tesla bear has taken umbrage with Jonas’ take. In fact, GLJ Research’s Gordon Johnson says the Morgan Stanley analyst conceding it is “difficult to explicitly validate the many claims Tesla has made about Dojo’s cost and performance,” seems like “TYPICAL Adam Jonas mumbo jumbo” and amounts to an admission that he’s “basically admitting his entire upgrade is speculation.”
“Why the market pays attention to this guy is BEYOND ME,” Johnson goes on to add. “But, keep in mind that MS is the banker for Musk, which may explain why he put out such a speculative note.”
Ouch, and there goes the mic drop. There are other specific issues that rankle with Johnson, who claims Jonas is upgrading the stock on “among the WORSE parts of the ‘TSLA is not an auto company’ story/thesis.”
For example, Johnson points to Consumer Reports testing that recently ranked TSLA 7-of-12 in advanced driver assistance technology, a drop from 2020’s number 2 spot, while Guidehouse recently put Tesla in the bottom position in advanced driver assistance technology. Moreover, the “many faults/real-world-mistakes with TSLA’s FSD tech” have also been regularly documented.
For Johnson’s conclusion, he takes aim at what he sees as frivolous behavior in what should be a serious profession. “What TSLA’s FSD vaporware does for the company is allow non-serious analysts/fund managers/etc. to have a perpetual ‘future promised land’ to point folks to as to why they should continue owning TSLA’s stock as the real business crumbles before our eyes,” he says. “There will (no doubt) be more stuff like this as TSLA’s fundamentals worsen (i.e., TSLA tech days, AI days, blah, blah, blah).”
It will come as no surprise to learn, then, that Johnson rates TSLA shares as Sell.
Johnson’s bear thesis gets support from 4 other analysts on the Street and with an additional 12 Buys and Holds, each, the stock claims a Hold consensus rating. The $272.50 average target suggests the shares are currently trading for their fair value. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
