Not all analysts on Wall Street are convinced Tesla ‘s in-house computer technology is enough to push shares higher. A day after Morgan Stanley’s Adam Jonas upgraded Tesla to overweight from equal weight with a massive $400 per share price target — suggesting about 61% upside from Friday’s close — Needham issued a dissenting take. “We reiterate our Hold rating, though our overall view shifts more negative as we foresee TSLA accelerating on the path to mirroring a mass market OEM [original equipment manufacturer], with our updated view on units (higher) and margins (lower) driving our investment thesis,” Needham analyst Chris Pierce wrote on Tuesday. The analyst did not provide a forecast price target, and said that he now expects flat year-over-year automotive sales gross margin in 2024, minus vehicle credits and incentives. TSLA YTD mountain Tesla stock. What underpinned the Morgan Stanley upgrade on Tesla was optimism toward the company’s effort with Dojo, an in-house supercomputer that is meant to train autonomous driving software. Tesla also makes its own chips to power the technology. The issue according to Pierce, however, is that the looming threat of Tesla’s drive to produce mass amounts of cars and the ensuing pressure to company margins is forcing the electric vehicle manufacturer to operate more like a mass-market OEM sooner than previously thought. Tesla has been on a price-cutting spree for much of 2023, with markdowns to both the Model 3 and Model Y . “As TSLA reboots, we think investor confidence in current FSD [full self driving] functionality, consumer demand, and TSLA’s ability to license FSD software to other OEMs should all re-rate lower, not higher,” Pierce added. While the analyst remains “sympathetic” over the long term on Tesla, he said, “We think that there is too much near-term uncertainty post its repeated price cuts.” — CNBC’s Michael Bloom contributed to this report.
