And if stock price reflects not past performance, but “risk-adjusted future cash flows,” as Tesla CEO Elon Musk tweeted in April, then investors must believe that Tesla has a bright future as an autonomous transport industry leader.
But a new Morgan Stanley research note asks a key question: Is Tesla a must-own strategic asset?
According to Morgan Stanley equity analyst Adam Jones, Tesla investors — and board members — need to ask themselves “whether the company is better off disrupting transport on a stand-alone basis or whether it could extract even greater value (while mitigating risk) as part of a larger entity or consortium.”
Citi analyst Jim Suva has already posited that were Apple to unload its massive offshore cash on a large acquisition, Tesla could be on its shortlist.
But a realistic assessment of the company’s long-term potential and risk is needed in order to determine what value Tesla truly has as a stock and as a company.
Musk himself has said that Tesla is not currently a profitable company and its market cap is most likely higher than it deserves. That hasn’t stopped investors from buying Tesla stock in bulk, but Jones believes soon talk surrounding the risk in investing in Tesla will intensify.
“As both traditional auto and non-traditional tech firms make further headway into the world of miles and data,” writes Jones, “we believe the discussion around the value, the opportunity and the risks of an investment in Tesla will evolve, if not accelerate.”
Get the latest Tesla stock price here.