Tesla’s energy unit gives Morgan Stanley a reason to modify the price target breakdown
Tesla’s energy sector emerged as a focal point in the recent second-quarter vehicle delivery report.
The Q2 energy storage deployment figures disclosed by Tesla have led Morgan Stanley and analyst Adam Jonas to give greater consideration to this division in their evaluation of the $310 price target assigned to Tesla shares.
Jonas commented to investors, “It’s understandable that investors are beginning to consider the possibility that Tesla Energy could be valued higher than Tesla Auto.”
In a broader context, Tesla is often viewed primarily as a car manufacturer. However, in reality, Tesla’s operations go well beyond automotive production. It operates extensively in vehicle manufacturing and energy storage, positioning itself as a potential frontrunner in AI, robotics, and software development.
Following Tesla’s report of delivering 6,000 units more than Wall Street’s consensus estimates, its stock price has surged. Yet, what truly astonishes analysts and fuels their upwardly revised price targets is the exceptional performance of Tesla’s energy division.
During Q2, Tesla experienced a substantial surge in energy deployments, setting a significant company record. The quarter recorded a remarkable 132 percent increase over Q1, surpassing the previous company record set during that period.
In the first quarter, Tesla announced energy deployments totaling 4.053 GWh. However, this figure paled in comparison to the staggering 9.4 GWh reported in the second quarter. This remarkable growth harks back to predictions made by CEO Elon Musk years ago, underscoring his long-term vision for the company’s energy division.
Nearly five years ago, during the company’s Q3 2019 Earnings Call, Musk remarked that Tesla’s Energy division had the potential to outgrow its automotive segment, envisioning it as a substantially larger part of the company’s future.
It could be bigger, but it will certainly be of a similar magnitude,” Musk stated. “The significance of Tesla Energy’s future role within the company cannot be overstated. Both divisions are poised to outpace the growth of our automotive sector. When you consider the year-over-year growth, the results will be astounding. Over the span of a year, we anticipate a tremendous surge.
Jonas shares this belief. In fact, as reported by Reuters, his $310 price target now allocates $284 to the automotive sector. Previously, Tesla Energy only contributed $36 to the overall valuation of $310.
Jonas has now raised it to $50 per share. This update also reflects Morgan Stanley’s revised projections for Tesla’s 2030 auto sales.
