As the U.S. approaches a new political era with possible implications for major industries, Tesla (TSLA, Financial) and its CEO Elon Musk, have been under the spotlight. Despite a recent 6.15% dip in Tesla's stock following profit-taking by investors, the stock remains up 32.23% year-to-date.
Morgan Stanley analysts remain optimistic about Tesla's trajectory. They suggest that if Tesla can expand beyond its core automotive business and Musk leverages newfound political influence, the stock could have significant upside potential. According to the analysts, in an optimistic scenario, Tesla's price could rise to $500 per share, reflecting a potential increase of roughly 52.2% from current levels.
Currently, 80% of Tesla's revenue comes from car sales. However, Morgan Stanley analysts highlight Tesla's energy business as a burgeoning area of interest. In 2023, Tesla's energy storage deployments grew by 125% and could double again, suggesting that Tesla's energy sector might soon surpass its automotive business in importance. The energy business's gross margin is nearly double that of the automotive sector.
Further, analysts view Tesla's advancements in autonomous driving as pivotal to its evolution into an AI powerhouse. Companies that can integrate capabilities in data, robotics, energy, AI, and manufacturing are expected to lead in autonomous driving. Over time, Tesla is believed to benefit from these developments.
On the political front, Musk's influence is anticipated to grow, potentially benefiting Tesla. Musk's contributions have exceeded $130 million to political campaigns, including support for the Republican Party and former President Trump. His political influence could drive policies that aid electric vehicles, robotics, and renewable energy, accelerating Tesla's transformation beyond an automotive manufacturer.
