Morgan Stanley issues blunt take on Tesla stock after earnings

Morgan Stanley is inactive bullish connected Tesla’s (TSLA) long-term story, but it doesn’t deliberation investors should disregard the messy middle.

Tesla released its Q1 2026 net study connected Wednesday, April 22, 2026, to a mixed response, though the numbers looked bully connected the surface.

According to Seeking Alpha, revenues changeable up $22.4 billion, blowing past the $21.1 cardinal consensus, portion adjusted EPS came successful astatine 41 cents, supra the 30-cent estimate.

On apical of that, escaped currency travel was astonishing astatine $1.4 billion.

However, the prime of the bushed mattered.

Auto gross margins were boosted by a monolithic $230 cardinal merchandise of the warranty reserve, portion vigor margins received an adjacent larger $250 cardinal tariff rebate.

Consequently, the slope reiterated its equal-weight standing and $415 terms people connected Tesla. With shares precocious trading successful the $375 to $380 range, that implies astir 9% to 11% upside.

To that point, the bigger contented with the company’s near-term positioning is that its aboriginal businesses inactive look a batch much similar aboriginal businesses.

Robotaxi rollouts are moving overmuch much dilatory than expected, and unsupervised FSD is improbable to statesman until precocious 2026.

At the aforesaid time, Tesla’s capex guidance surged to $25 billion, which raises the outgo of chasing that future.

• Tesla banal returned -3.24% implicit 1 week, compared with the S&P 500’s 1.76% return.

• Tesla banal returned -1.19% implicit 1 month, compared with the S&P 500’s 8.88% return.

• Tesla banal returned -16.19% implicit six months, compared with the S&P 500’s 6.33% return.

• Tesla banal returned -16.33% twelvemonth to date, compared with the S&P 500’s 4.67% return.

• Tesla banal returned 50.08% implicit 1 year, compared with the S&P 500’s 33.28% return.

• Tesla banal returned 127.95% implicit 3 years, compared with the S&P 500’s 73.34% return.
  Source: Seeking Alpha

• Base case: $415 terms target. Morgan Stanley’s basal lawsuit doesn’t dainty Tesla arsenic a elemental car company. It assigns lone $45 a stock for its halfway EV business, forecasting that astir of its worth comes from aboriginal businesses including software, Robotaxi, energy, and Optimus.

• Bull case: $826. This is the mentation wherever “everything works.” Tesla is capable to merchantability acold much cars, station stronger margins, and proceed gathering an tremendous Robotaxi fleet, on with increasing vigor and Optimus businesses.

• Bear case: $131. This is what happens if Tesla remains babelike connected autos and its newer businesses neglect to make value.

Morgan Stanley didn’t disregard Tesla’s 4th outright, but warned astir it being a read-through for the remainder of the year.

A large portion of it was Tesla’s car margins getting a bump from one-offs. However, to beryllium fair, if we discount the credits from car margins, they inactive nudged up of Morgan Stanley’s 340-basis-point estimate.

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• Bank of America revamps Tesla banal price

• UBS has a connection for Tesla banal investors

The vigor businesses appeared to beryllium different metallic lining, but that, too, came with an asterisk.

Energy gross margins bushed the bank’s 1,350 ground constituent estimation and statement by 1,150 ground points, helped by $250 cardinal successful tariff rebates. If we exclude that, though, the conception inactive stands by a acold smaller 315 ground points versus the Morgan Stanley estimate.

Morgan Stanley’s rationale breaks down into 3 halfway areas:

• The bushed had prime questions. One-time items helped bushed margins, portion Tesla’s absorption talked astir unit from contention and tariffs.

• The spending rhythm is getting bigger. Capex guidance surged by $5 cardinal to much than $25 billion, according to Benzinga, and Morgan Stanley present models $26.1 cardinal successful capex and $11.6 cardinal successful escaped currency travel burn.

• The AI timeline is slower. Robotaxi miles are up much than 2.5 times since December, but Musk said “rigorous validation” is the limiting factor. At the aforesaid time, unsupervised FSD whitethorn commencement successful Q4, and 3.5 cardinal HW3 vehicles whitethorn beryllium near behind.

• Wedbush has a terms people of $600 for Tesla stock, Benzinga indicates.

• Cantor Fitzgerald has a terms people of $510 for Tesla stock, according to Barron's.

• Stifel has a terms people of $508 for Tesla stock, Investing.com confirms.

• RBC Capital has a terms people of $475 for Tesla stock, TipRanks notes.

• Canaccord Genuity has a terms people of $450 for Tesla stock, according to Investing.com.

• UBS has a terms people of $364 for Tesla stock, MarketScreener confirms.

Tesla’s biggest hazard present is that its aboriginal keeps feeling farther away.

The slope inactive validates its semipermanent carnal AI story, but clearly, the near-term setup is messy.

The EV elephantine is spending a ton, with 2026 capex already expected to apical $25 billion, portion Robotaxi and Optimus commercialization are arriving overmuch slower than investors had hoped.

Meanwhile, Tesla’s valuation is already giving the institution recognition for businesses that aren’t afloat scaled yet.

For context, Tesla banal is trading astatine an eye-watering 179 times guardant earnings, 54% supra its 5-year average, according to Seeking Alpha.

Tesla trades astatine 14.6 times guardant sales, a 507% premium to the assemblage median.

On apical of that, Robotaxi enlargement is linked to “rigorous validation,” and it's a monolithic bummer that its HW3 vehicles don't enactment unsupervised FSD.

Throw successful the imaginable borderline issues linked to tariffs, competition, and uneven vigor retention demand, on with increasing escaped currency travel burn, and things get adjacent much complicated.

Related: Fidelity sends blunt connection connected S&P 500 aft abrupt rebound

This communicative was primitively published by TheStreet connected Apr 25, 2026, wherever it archetypal appeared successful the Investing section. Add TheStreet arsenic a Preferred Source by clicking here.