To say that the equity research team at Morgan Stanley is bullish on Tesla Motors is a serious understatement. Morgan Stanley analyst Adam Jonas and colleagues published a video presenting the bull case on Tesla on Thursday, March 12th. The video argues that Tesla’s research heavy, customer-focused business model is set to revolutionize the automobile industry.
Jonas et al. sum up their take on Tesla Motors Inc (NASDAQ:TSLA) in the conclusion to their just under four-minute video: “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…”
Tesla as a research company
The first point the Morgan Stanley video makes is that Tesla Motors Inc (NASDAQ:TSLA) is really as much a research firm as a car company. For starters, 60% of Tesla employees are involved in software engineering, compared to 2% for the average automobile company. They say that Tesla vehicles are really a huge Big Data experiment designed to gather detailed data about these new technologies and customer habits and preferences. This puts Tesla at a huge long-term advantage over other car companies that will eventually pay off handsomely.
Top value fund managers are ready for the small cap bear market to be done
During the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More
Jonas and team also emphasize the importance (and value) of a brilliant and visionary leader like Elon Musk.
Tesla to become major battery player
Tesla Motors Inc (NASDAQ:TSLA) also plans to become one of the largest global manufacturers of lithium-ion batteries.
According to the video: “Tesla’s all-electric power train makes the company one of the largest consumers of lithium ion batteries in the world, and it wants to be the world’s biggest producer of lithium ion batteries. How big? Like five times bigger than the next-biggest player. By 2029 we estimate Tesla’s 6.5 million unit global fleet will contain a stored energy capacity of 410 gigawatt hours, an amount equal to the entire daily consumption of electricity in the nation of Mexico.”
The Morgan Stanley video also highlights that Tesla Motors Inc (NASDAQ:TSLA) is hands-down the most customer-focused auto manufacturer. Jonas et al. point to the company’s direct sales model is designed to maximize customer interaction and feedback, and that the company is constantly innovating in trying to improve the customer experience.