A big analyst named Adam Jonas thinks that a car company called Tesla might not make as much money this year and sell fewer cars than people thought. He also says they might have to stop lowering prices so much because it's hurting their profits. This could make some people worried about buying Tesla stock, so the price went down a bit. But Adam Jonas still thinks Tesla is more of an AI company than just a car company, and he believes they will do well in the future if they can show they are really good at making smart cars with computers inside. Read from source...

1. Jonas's bear case of $100 per share is unrealistic and based on a flawed assumption that Tesla will not get credit as an AI company unless it stabilizes its auto earnings. This ignores the fact that Tesla has already demonstrated its ability to generate significant value from its AI capabilities in other segments, such as energy storage, solar, autonomous driving, and insurance. Furthermore, Jonas's focus on core auto earnings misses the point that Tesla is transforming into a vertically integrated AI company that can leverage its data and software advantages across multiple industries. Therefore, his forecast of lower FY24 sales volume and auto gross margin does not reflect the potential for Tesla to capture new markets and expand its user base with its innovative products and services.

Bearish

Summary:
Morgan Stanley analyst Adam Jonas cuts Tesla's target price and forecasts lower FY24 sales volume due to potential GAAP EBIT loss in the auto business, profitability hit, and reduced focus on price cuts. He also lowers his unit volume estimate for FY24 and auto gross margin expectation. Despite this, he maintains an overweight rating on Tesla as he views it as an AI company. However, he believes Tesla needs to stabilize its earnings in the core auto business first to get credit as an AI company.

1. Tesla is facing a challenging year ahead, with potential GAAP EBIT loss in the auto business, lower operating margins, and reduced unit volume forecast for FY24. This indicates that the company's growth trajectory may slow down significantly over the next few years. Investors should be cautious about investing in Tesla at its current valuation, which is still relatively high compared to other automakers and EV companies. However, there are some potential upsides to owning Tesla stock:
* The company's focus on AI and autonomous driving technology could lead to significant advancements in this field, making it a leader in the emerging market for self-driving cars. This could provide a strong competitive advantage and drive long-term growth for Tesla.
* Tesla has a loyal customer base and strong brand recognition, which could help it maintain market share and attract new customers despite the challenges facing the auto industry.
* The company's commitment to sustainability and renewable energy could also be seen as a positive by environmentally conscious investors, who may be willing to pay a premium for Tesla's products and services.
2. Risks to consider before investing in Tesla include:
* The ongoing global semiconductor shortage, which has affected the auto industry as a whole, could continue to hurt Tesla's production and sales numbers in the near term. This could lead to further downgrades in analyst estimates and increased volatility in Tesla's stock price.
* The company's heavy reliance on regulatory approvals for its autonomous driving technology, which is still in development and not yet widely available to consumers. If regulators do not approve or delay the approval process for Tesla's self-driving features, this could negatively impact the company's growth prospects and stock price.
* The potential for increased competition from other automakers and EV companies, who are also investing in autonomous driving technology and electric vehicle development. This could lead to a more crowded marketplace and reduced pricing power for Tesla, making it harder for the company to maintain its current market share and profitability.