The Tesla (TSLA) Cybertruck is likely to be a 'cult car' with limited volume says Morgan Stanley

March 9, 2023 7:34 AM EST
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Morgan Stanley reiterated an Overweight rating and $220.00 price target on Tesla (NASDAQ: TSLA). After speaking with clients, analyst Adam Jonas feels there may be some room to manage expectations about the significance of the Cybertruck.

There are some who believe that Tesla may sell many hundreds of thousands of Cybertrucks annually. However, Jonas thinks it will more likely be an enthusiast/cult car with far more limited volume. Somewhere closer to 50k units/year.

“The Cybertruck is an important element of Tesla’s futurist brand image.” Writes Jonas. “One of the most interesting features of the truck is the lack of a Tesla emblem anywhere on its exterior. The truck itself is emblematic of the company and the risks it is willing to take to push the envelope and reinvent so many aspects of what it means to be an auto manufacturer. We feel the Cybertruck carries more value in a cultural/zeitgeist sense than in a direct economic sense. At the same time, we encourage our readers to ask themselves: how many Cybertrucks can roll up to a parent-teacher conference or youth soccer match at the same time before losing some of that indescribable… something?”

In November of 2019, when Tesla first unveiled the Cybertruck, the company’s share price was around $22 with a market cap of just under $65bn. At the time, Tesla was just beginning to post positive GAAP profit and was still ramping up its Shanghai plant.

“A lot has changed since Franz von Holzhausen threw a metal ball at the ‘Armor Glass’ window of the Cybertruck in November 2019.” Writes Jonas. “The truck is real and we had a great time with it last week behind the Austin plant. But financially it may be more of a ‘side-show’ to the Tesla story today.”

Morgan Stanley still thinks the Cybertruck is an important product for Tesla in many ways. At the same time, they think investors can consider that Tesla’s mission, and the expectations embedded in its $650bn market cap, has expanded exponentially since 2019.

Shares of TSLA are down 3.08% in pre-market trading on Thursday.

By Michael Elkins | [email protected]

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