Morgan Stanley, in a research note published on Tuesday, cautioned that new “distractions” could emerge for Tesla following CEO Elon Musk’s weekend announcement that he plans to launch a new political party.
The situation escalated further as Donald Trump denounced the move and accused Tesla’s chief of fostering “disruption and chaos.” The company’s shares dropped 6.8% on Monday, closing at $293.94.
In a new research note, analyst Adam Jonas said the firm believes “investors should be prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk’s political priorities.”
“We believe investors should be prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk’s political priorities which may add further near-term pressure to TSLA shares,” he stated.
Noting that Musk’s political involvement is “part of a planned strategy to achieve a specific goal,” designed to “bring maximum public attention to a range of issues,” Jonas highlighted the “further near term-pressure to Tesla shares.”
The chief executive has been raising concerns among shareholders since the beginning of the year, when he joined the Trump Administration as the head of the Department of Government Efficiency (DOGE).
Among increasing competition and the revamp of its best-selling Model Y, Musk’s actions have been pointed out as one of the reasons for Tesla’s weaker results in the first quarter.
The EV maker’s stock surged in late May as Musk announced he was leaving his governmental role, with Wedbush saying it was “like music” to the ears of Tesla investors.
However, shares of the EV maker plunged 9% on June 5 as Musk and the U.S. President Donald Trump attacked each other over Trump’s intention to eliminate EV tax credits.
A day after, Adam Jonas reiterated Tesla‘s $410 price target — which implied an upside potential of 44% based on the previous close of $284.70.
By then, the analyst stated that “Tesla’s 50pct rally was driven primarily by hopes that Elon Musk wold refocus time and attention on Tesla.”
“While the situation remains fluid, we believe the disagreement will not help Tesla demand,” he noted, adding that it “could potentially (temporarily) alienate multiple sides of the political spectrum.”
On June 10, the analyst justified Morgan Stanley’s reaffirmed Overweight rating on the company’s stock despite increasing challenges on the EV business — which include auto tariffs and incentive cuts in the U.S.
The firm continued to name Tesla as its “‘Top Pick’ in US autos,” citing confidence in the EV maker’s “capabilities in key areas of physical AI” and “margin opportunities that greatly exceed those of the traditional EV business.”
In Tuesday’s note, Jonas once again highlighted the potential market value of humanoid robots as the company refocus towards AI.
According to the analyst, Tesla had “125,665 employees worldwide” by the end of 2024. “On our calculations, a 10% substitution to humanoid at approximately ($200,000 NPV/humanoid) could be worth approximately $2.5 billion,” Jonas wrote.
The analyst also mentioned the brand’s second-quarter vehicle deliveries, which were in line with Morgan Stanley’s estimates, beating a “low buy side bar” of 350,000 to 360,000 units.
The U.S. brand delivered 384,122 vehicles in the April-June period, down from the 443,956 units from a year ago, but up from the 336,681 sold from January to March. Morgan Stanley forecasts volumes will decline by 13% in the second half of 2025.
Tesla will report its second quarter earnings results on July 23. By then, Morgan Stanley expects the company to address its robotaxi “roadmap” and tackle AI and robotics developments.
