Morgan Stanley has a positive outlook on Tesla, giving it an Overweight rating and a price target of $410. This perspective remains stable even though Tesla’s stock has faced pressure from Elon Musk’s recent clash with Donald Trump. The bank acknowledges the current ups and downs but sees the long-term risks, like potential cuts to EV tax credits, as minor. They believe Tesla’s worth goes beyond just electric vehicles, highlighting the influence of other sectors on its success. The stock recently increased due to optimism about Musk refocusing on Tesla’s core business. However, the conflict with Trump might temporarily affect consumer perception. Morgan Stanley points out that Tesla excels in areas like AI, robotics, energy solutions, and infrastructure, all of which are stable and less influenced by political changes. They think Tesla’s AI and tech skills are undervalued and advise focusing on the company’s long-term growth rather than short-term ups and downs. The analysis shows strong belief in Tesla’s future, despite recent market changes. Although the stock has faced pressure due to controversies surrounding its CEO and his comments about the former U.S. President, Morgan Stanley remains optimistic about the company’s long-term prospects. The price target indicates significant confidence in Tesla’s value, which goes beyond electric vehicle sales. The bank sees recent market fluctuations as noise, not a true trend shift. It considers potential threats, like changes in U.S. tax incentives, as unlikely to derail Tesla’s long-term path. They believe temporary political or regulatory issues won’t significantly affect their valuation model. Instead, they focus on Tesla’s advancements in AI, renewable energy storage, and autonomous systems, which are expected to drive revenue in the future, independent of the company’s more public-facing products. There’s cautious optimism about management’s renewed focus, which may have helped boost share prices recently, though this momentum could be tested soon. Political headlines are shaking investor confidence, especially among retail buyers, potentially leading to more swings in the stock price, even as demand remains steady. We see the market reacting more to headlines than to solid valuations right now. Thus, fluctuations caused by media statements or public disagreements should be watched but not overreacted to. Our advice is to adjust exposure accordingly and strengthen risk controls, particularly for those holding positions sensitive to market changes. Given Morgan Stanley’s focus on Tesla’s undervalued non-automotive sectors, there’s more room for recovery, even after the recent rally. The AI segment is crucial to this outlook. We expect institutional support to limit downside risks, even amidst temporary sales driven by sentiment. Option traders should prepare for increased implied volatility around upcoming management appearances or statements, especially if media coverage is intense. Gamma exposure might become more significant at key support levels. We anticipate a period where price moves might diverge from fundamental values, creating opportunities for directional strategies and short-term trades. Adjust strategies for short-duration trades, and be on the lookout for volume spikes that could indicate shifts in participant interest. For now, aim to accumulate shares on dips rather than chasing big price increases. Use defined risk and avoid overextending positions.

here to set up a live account on VT Markets now