Morgan Stanley, one of the most prominent supporters of electric luxury car maker, Tesla Motors Inc., has issued a cautious report sending its shares into the pothole by Monday evening.
The news comes after Morgan Stanley’s investment research development cautioned warning in regards to Tesla’s speedy rise in past few months. Morgan Stanley was one of the first investors to support Tesla Motors fad and in past few months it pointed out how it views Tesla as more than an automakers, predicting that the company could be making billions from energy storage by the end of this decade.
Today, however, it expressed worries, letting its clients know that they need "not expect the stock to appreciate so consistently and one-directionally from here." It includes the company’s infrastructure challenges in China to the failure of other automakers to adapt electric car manufacturing as well as the ascent of autonomous cars which could threaten its glowing stance, it said in the report.
Adam Jonas, an analyst for Morgan Stanley, wrote on Monday, that he agreed with Elon Musk, CEO of Tesla, that it’s “share price was a bit ahead of itself”.
Jonas issued four "sobering factors to consider" about Tesla. He wrote that electric vehicles are "failing categorically on a global scale," cautioned that Tesla's growth rate may be constrained in China, that battery-powered cars still require technological leaps in order to become more mainstream and that the beginning of driverless cars undermine Tesla's future growth.
“We are big believers in Tesla’s strategy and stand firmly by our claim that it is the world’s most important car company,” Jonas wrote. “But we do not expect the stock to appreciate so consistently and one-directionally from here.”
Investors may have overlooked Elon Musk's warning that the share prices of Tesla Motors were a little too much; however they didn't close their eyes to a warning from one of the biggest supporters of the automaker. Shares of Tesla fell $25.34 today to $253.86 in New York.
On a brighter side, Morgan Stanley, still views Tesla as a prominent-player in the auto-industry calling it “the world’s most important car company”. It also thinks that shares of Tesla can go much higher than they are at present “but perhaps not so quickly and not for some of the reasons we believe are driving the market,” analyst Adam Jonas writes.