Morgan Stanley's Adam Jonas is quite famous for his investment notes on Tesla, which are often replete with fanciful musings that then constitute a basis for the analyst's uber-rosy revenue projections for the EV giant. Consider Jonas' latest investment note where he goes so far as to assign an upside potential for the Tesla stock that ranges between $100 per share and $1,000 per share, all based on a line of business that does not exist!
NEWS: Morgan Stanley's Adam Jonas has released a new $TSLA note.
"Is it just me, or are you seeing more ‘breadcrumbs’ from Tesla’s CEO that could potentially connect Tesla with aviation? Tesla sits at the intersection of robotics and AI. Cars (81% of TSLA revenues… and falling)… pic.twitter.com/HjxUYbbEPG
— Sawyer Merritt (@SawyerMerritt) September 30, 2024
To wit, Adam Jonas points to two tangential developments to suggest that Tesla might try to leverage the $9 trillion (by 2050) Total Addressable Market (TAM) for drones and eVTOLs in the not-too-distant future.
First, the analyst points to an X post that highlights the yawning gap between the drone production capacities of the US and China, where the former is currently capable of producing just 20,000 drones per year while the latter is capable of producing this volume in a single day! Elon Musk responded to this post by noting: "Yeah, it's not even close."
Next, Adam Jonas points to Elon Musk's introductory remarks during Tesla's Q2 2024 earnings call, where the mega-billionaire noted that "the world is headed for fully electrified transport, not just the cars but also aircraft and boats." This follows Elon Musk's "passing mention" of an electric aircraft during Tesla's 2020, 2021, and 2023 investor days.
According to the analyst, if Tesla were to jump into the business of manufacturing drones and eVTOLs, the potential upside for the stock would range between $100 per share and a whopping $1,000 per share. Critically, Jonas has not included this upshot in his current Tesla stock price target of $310 per share.
Bear in mind that Adam Jonas had first broached Tesla's possible entry in the drones/eVTOL business back in 2021, when he had implied that it was merely a question of if and not when, given the fact that this line of business simply made too much economic sense for Tesla to ignore it.
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