Well, well, well. After two years of being Tesla’s biggest cheerleader on Wall Street, Morgan Stanley just pulled a classic “it’s not you, it’s me” move. Analyst Andrew Percoco downgraded Tesla from “buy” to “hold” on Monday, and TSLA stock promptly threw a 4% tantrum in response.
Here’s the tea: Percoco still thinks Tesla is doing cool stuff (hello, robot cars and humanoid workers), but he’s basically saying the stock price got a little too excited about itself. Think of it like your friend who’s genuinely talented but keeps posting about their “hustle” every five minutes on LinkedIn.
The analyst bumped up his price target to $425 per share (up from $410), but here’s the kicker – that still suggests Tesla should drop about 3% from where it was trading Monday. It’s like saying “you’re great, but maybe dial it back a notch.”
So what’s got Morgan Stanley pumping the brakes? A few things, actually:
The EV Reality Check
Turns out, Americans aren’t buying electric cars as fast as everyone hoped. Shocking, I know. Percoco slashed his volume expectations by 10.5% for 2026 and a whopping 18.5% through 2040. Translation: Tesla might sell fewer cars because people are still figuring out this whole “plugging in your car” thing, plus there’s more competition than a Black Friday sale.
The “We’re More Than Cars” Problem
Tesla keeps insisting it’s not just a car company – it’s a tech company that happens to make cars. Fair enough. But Morgan Stanley is basically saying, “Cool story, but prove it.” The bank sees potential in Tesla’s robotaxi dreams and Optimus robots, but execution risk is real. It’s like promising to cook a five-course meal when you’re still figuring out how to boil water.
The Camera vs. LiDAR Drama
While other companies use fancy LiDAR sensors for self-driving cars, Elon Musk is out here saying “cameras are fine, trust me bro.” Morgan Stanley is a bit nervous about this approach, especially when it comes to convincing regulators that camera-only systems can handle, say, a Michigan snowstorm.
China’s Robot Army
Remember those Optimus robots Musk says will eliminate poverty? Well, China’s government is throwing serious money at humanoid robotics too. It’s like showing up to a potluck with store-bought cookies when everyone else brought homemade lasagna.
The bottom line? Percoco isn’t bearish on Tesla – he’s just saying maybe wait for a better entry point. Tesla’s had a wild year, down 45% at one point before rallying back to a 12% gain year-to-date. The stock’s basically been on more roller coasters than a Six Flags enthusiast.
Morgan Stanley expects the next 12 months to be “choppy” for Tesla shares. In Wall Street speak, that means buckle up, because this ride isn’t getting any smoother anytime soon.