Tesla's (TSLA) EBITDA Margin May Be 'Too High' and Could Lead to $20K EV Prices - Morgan Stanley

July 29, 2021 10:52 AM EDT
Get Alerts TSLA Hot Sheet
Price: $166.66 --0%

Rating Summary:
    32 Buy, 17 Hold, 10 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 3 | Down: 9 | New: 4
Join SI Premium – FREE

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

Morgan Stanley analyst, Adam Jonas reiterated Tesla’s (NASDAQ: TSLA) Overweight rating and a $900 price target after reviewing the company’s 2Q earnings report and explains why the report was "so bearish for the auto industry."

Jonas notes the 21% Adj. EBITDA margin in the quarter may not seem like a big deal, but it is a "very big deal." Jonas reported that the company is producing an EBITDA margin “much closer to the luxury end of the auto market than to the average industry margin.”

The analyst actually thinks Tesla’s EBITDA margin may be “too high” and believes that the company should invest its margin back into price. This would help Tesla to “expand the availability of lower priced Tesla vehicles to as many people as possible.“

Morgan Stanley sees the EV market as a “highly deflationary” business and is prepared for Tesla vehicles to be offered for as low as s $20k/unit by the end of this decade.

Jonas also expects the price of certain EVs across different manufacturers to be as low as $10k. Morgan Stanley believes that OEM profitability will be derived from monetizing the customer via other revenue streams, such as software.

By Michael Elkins | [email protected]

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Analyst Comments

Related Entities

Morgan Stanley, Tesla, Earnings, Michael Elkins