Printed on June 25th, 2020 |
by Steve Hanley
June 25th, 2020 by Steve Hanley
If you’re an everyday reader of CleanTechnica, you might be in all probability acquainted with Adam Jonas, the auto analyst for Morgan Stanley well-known for asking “interesting” questions of Elon Musk throughout earnings calls. This week, Jonas is advising his purchasers that gross sales of electrical automobiles will make Normal Motors a $100 billion firm (it presently has a market cap of round $38 billion). On the identical time, he warns that Tesla stock is about to lose a couple of third of its value.
The Case For GM & EVs
Credit score: GM
Jonas mentioned this week that he expects electrical automobile deliveries will hit 50,000 in 2020 (most of them in China, clearly, since GM can’t appear to promote its Bolt EV and has put an $8,500 hickey on the automobile each month since March). 50,000 is 1% of GM’s annual gross sales, however Jonas says by 2040 EVs will account for 80% of GM’s enterprise, in line with a report by Barron’s.
To get to that $100 billion quantity, GM stock must hit $68 a share — a far cry from its current value of about $25 a share. The truth is, for the reason that starting of the yr, GM has underperformed the market, dropping practically 30% of its value since January 1. After Jonas issued his analysis notice, shares of GM plunged one other $three a share.
However buyers are GM by way of the unsuitable finish of the telescope, Jonas says. He thinks they need to consider GM as extra of a tech stock, like Tesla — which presently has a market cap 5 occasions larger than GM’s. Warren Buffett famously likes long-term investments — purchase nicely managed corporations, then sit again and allow them to carry out. However most buyers don’t have a 20 yr timeline. The truth is, many observers query whether or not GM will nonetheless be round in any respect in 2040.
Barron’s is skeptical. They notice that Jonas’s personal price goal for GM is $43 a share. They appear to suggest that Jonas’s evaluation is little greater than magical pondering.
A lot of Jonas’s pondering appears to be primarily based on the truth that electrical automobile corporations are having fun with stable positive aspects on Wall Street to date this yr. Tesla is up 140%, NIO is up 80%, and BYD has posted a 58% achieve. However Tesla stock is prepared for a retreat, Jonas says. Now that it’s planning to ship half 1,000,000 automobiles this yr, Jonas thinks buyers ought to value it extra like one other automobile firm as a substitute of a tech firm. He’s suggesting the stock might lose a couple of third of its value within the close to time period.
Talking in his “royal we” voice, Jonas wrote to purchasers this week, “We understand the attraction of the Tesla story. We think investors may have a chance to revisit the stock at a more attractive price. We believe $1,000/share discounts outcomes that, while plausible, may ignore a host of execution/market risks,” in line with Enterprise Insider.
Morgan Stanley has set a price goal of $650 on Tesla stock, equal to a Promote suggestion. Whereas many buyers consider Tesla like one other Apple or Google or Amazon, “One would have to consider (or ignore) significant inherent differences in Tesla’s business model and capital intensity” in comparison with different tech names, in line with Jonas. “One must also take into account many of Tesla’s business objectives face a degree of execution risk that may be significantly higher than many of the more proven/mature companies in this analysis.”
In different phrases, investing is a crap shoot. Place your bets and good luck.
The creator has a modest stake in NIO. Hat tip to Chanan Bos.
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Tags: Adam Jonas, Normal Motors, GM stock, Morgan Stanley, Tesla, Tesla stock
In regards to the Creator
Steve Hanley Steve writes concerning the interface between know-how and sustainability from his properties in Florida and Connecticut or anyplace else the Singularity may lead him. You’ll be able to observe him on Twitter however not on any social media platforms run by evil overlords like Fb.