If there was one analyst you'd expect to swallow Elon Musk's perpetually rosy, if just as perpetually inaccurate, forecast about the future, it would be Morgan Stanley's Adam Jonas, who on numerous occasions has demonstrated his desire to become Tesla's most fawning Wall Street fanboy (it's ok Adam, we understand that Morgan Stanley has to be lead-left on Tesla's next stock/convert/junk bond/DIP Loan offering somehow).
And yet, in a note released overnight, Jonas, who a month ago showed a glimpse of his rebellious spirit when he said that "Tesla's Call Was The Most Unusual I Have Experienced In 20 Years", may have angered Tony Stark with a note that pretty much threw up all over Musk's latest set of rosy expectations delivered during the Tesla shareholder meeting (which were further complicated by a report that Tesla's new production robots are not even operational yet).
So what did Jonas have to say? Well, for one, it appears that the blue pill is wearing off, because his assessment of Musk's hyperoptimistic "narrative" is that it was "positive, but not a surprise", and was geared at one thing only: to force another short squeeze (which as we observed yesterday, was clearly achieved):
Tesla added $5bn in market cap following positive comments from Elon Musk at the annual general meeting on volume, profit and cash flow. We think the stock move reflects more on investor positioning (bearish) than truly incremental data on fundamentals (positive, but not a surprise?).
But what were Jonas' explicit disagreements with Musk? As the following list reveals, perhaps a better question is what he did no disagree with, to wit:
Still, there was some of the old Jonas left, and as he summarizes, "if Tesla were able to achieve 5k of weekly production of Model 3 and avoid a significantly dilutive or expensive capital raise, it could trigger a continued squeeze in the name."
It was also the "old Jonas" who kept his Tesla price target unchanged:
Reiterate Equal-Weight. Our PT of $291 is comprised of 2 components: The first is a $196/share DCF value of the core Tesla Auto business on a 13% WACC, 10x exit EBITDA and exit EBIT margins of 9.8%. The second component is our valuation of Tesla Mobility at $95/share (what the company has announced as 'Tesla Network') based on a DCF to 2030 and a 13% WACC. Our price target applies zero value for Tesla Energy and zero value for SCTY.
Even so, the new and more bold Jonas is becoming increasingly vocal, and warns that "longer-term strategic and competitive issues remain" and concludes that "Tesla is trading slightly above fair value and would recommend investors prepare for volatility."
Finally, there is the question of addressable markets. As Barclays showed two weeks ago, Musk's admission that the $30K price point is a cash burn loss leader for Tesla was bad news, because unfortunately that's where the bulk of cars sold are. If Tesla persists in selling only cars costing $50K and higher - the sweet zone where it actually does generate cash - then Musk will have a major problem.