Tesla (IW 500/384) is getting a big vote of confidence from a Morgan Stanley equity research team. Analyst Adam Jonas and his team released a nearly four-minute video Thursday making their case, saying Tesla is much more than just a car company, and that it will change the entire auto industry.
"This is a hyper-ambitious company, and the only one we cover whose stock price can realistically multiply by ten. It can also get cut in half. But we think patient investors will be rewarded if they can hang on for a wild ride."
Much of the speculation comes from Tesla’s research and battery development departments. The company is on pace to become one of the largest manufacturers of lithium-ion batteries, a market that’s expected to explode in the next five years.
And the engineering software Tesla is developing has it on a far more ambitious path than other car companies. More than half of its employees work in software development compared to only about 2% at other carmakers.
In the video, Jonas points out that CEO Elon Musk isn’t looking for a typical car person, and the company’s location is a selling point; "When Elon wants to hire a key software engineer, he doesn't call Hyundai or BMW. He goes to places like Apple, Google, Facebook. Theoretically, this talent could move to Detroit, or they could stay in California.”
Tesla was also praised for its customer-focused approach. The company does direct sales to customers, using all the information gathered to learn improve the experience.
If Jonas and team are right, Tesla would hit around $1,900 a share, overtaking companies like Facebook and Coke, and be five times bigger than its closest rival
So far the high praise hasn’t sent shares skyrocketing on Wall Street, TSLA was hovering near $190 a share Friday.