There will be many trading opportunities in the future.
Written by: Long Yue, Wall Street Insights
When the world's richest man clashes with the U.S. president on social media, the capital markets sense unusual signals.
According to reports from the Wind Trading Desk, Morgan Stanley's latest report reveals that this seemingly sudden "Tesla vs. Trump" battle is actually a carefully designed strategy by Musk to achieve specific goals and gain attention. He believes that the fate of businesses is ultimately closely tied to the overall financial strength of the country. The market has clearly underestimated Musk's determination and his ability to withstand negative impacts. The decline in Tesla's stock price may only be a temporary "sacrifice."
This Wall Street giant warns investors that if the differences between Musk and the president continue to escalate, Tesla's stock price will face more severe fluctuations, but at the same time, it will create numerous trading opportunities. Analysts maintain Tesla as the "preferred stock" in the U.S. automotive sector, with a target price of $410, optimistic about its long-term prospects in the physical AI field.
Musk's Strategic Layout
In a report released on June 10, Morgan Stanley's automotive team unusually included Musk's political actions in the investment framework analysis for Tesla.
Morgan Stanley analyst Adam Jonas pointed out that Musk's recent comments about America's "twin deficits" (budget deficit and national debt) are far from spontaneous. Last week's "Tesla vs. Trump" battle was likely a carefully planned strategy by Musk aimed at bringing relevant issues to the forefront of public attention through his influence.
Analysts interpret that the credit outlook and fiscal situation in the U.S., including budget deficits and national debt, seem to have risen to the top priority for Tesla's CEO. Morgan Stanley believes that Musk thinks that no matter how successful companies like Tesla and SpaceX are on an individual level, they are ultimately closely related to the overall financial strength of the country.
Musk likens U.S. sovereign credit to a "ship at sea," pointing out that the health of national finances is the ultimate anchor for business development.
$300 Billion "Ammunition": Underestimated Influence
Morgan Stanley's report particularly emphasizes a key factor overlooked by the market: Musk has assets ranging from $300 billion to $350 billion (including public and private assets). He can leverage a tiny portion of his assets to influence national policy discussions. Morgan Stanley poses a question:
How much attention and support can $5 billion or $10 billion in funding bring to issues that Musk deems important?
This substantial financial background gives Musk's every public statement an influence and sustainability that surpasses that of ordinary entrepreneurs.
Analysts believe that history is telling investors that they may once again underestimate Musk's determination and his resilience in withstanding criticism and financial losses. Jonas reminds investors to reflect on history in the report:
Do you remember the collective skepticism in the market when Musk acquired a social media company (Twitter) a few years ago? Do you recall the frustration when he began to visibly invest resources in the political arena?
According to Morgan Stanley's analysis, Musk's involvement in political activities has a negative impact on Tesla's products and brand, which is a short-term "sacrifice" that will not be a surprise to the company's management.
Trading Opportunities Amid Volatility
Morgan Stanley warns that if the confrontation between Musk and Trump continues to escalate, Tesla's stock volatility will further amplify, but such drastic fluctuations will also create "a series of trading opportunities."
It is worth noting that Musk currently manages five companies (Tesla, SpaceX, Boring, Neuralink, xAI), controlling four of them privately, but holding only 13% of the shares in the only publicly traded company, Tesla (excluding the controversial compensation plan).
Morgan Stanley believes that Tesla's expertise in manufacturing, data collection, robotics/physical AI, energy, supply chain, and infrastructure is more crucial than ever for keeping the U.S. competitive in the embodied AI field against other countries.
Maintaining "Preferred Stock" Rating
Despite facing political risks, Morgan Stanley still maintains Tesla as the "preferred stock" in the U.S. automotive sector, with a target price of $410 (representing a 33% upside from the June 9 closing price of $308.58).
The investment bank states that its overweight rating and price target are based on confidence in Tesla's capabilities in key areas of physical AI, including autonomous vehicles, humanoid robots, and other form factors, covering data, robotics, energy storage, computing, manufacturing, and space/communication/network/infrastructure. These growth and profit opportunities far exceed those of traditional electric vehicle businesses.
As various businesses continue to expand, Morgan Stanley anticipates that the timing for strategic cross-collaboration between different entities is approaching: Grok entering the automotive sector, SpaceX loading Cybertrucks, Optimus prosthetics for Neuralink patients, xAI training in Optimus and Cybercab, and so on, presenting a wealth of possibilities.
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