Tesla shares roar after upgrade

A Morgan Stanley analyst thinks electric cars could total 15% of all autos sold by 2025. Tesla will benefit from that, he adds. With video updates.

By Kim Peterson Mar 31, 2011 2:33PM
Shares of Tesla Motors (TSLA) soared as high as 19% Thursday after an analyst predicted the company will benefit from a shift to electric cars.

The analyst, Adam Jonas of Morgan Stanley, said he thinks electric cars could total 5.5% of worldwide car sales by 2020. Five years after that, electric cars could amount to 15% of cars sold, he added.

It could take Tesla a decade or more to go from a California startup to a global auto player, Jonas added, according to Bloomberg. But the company has a "viable opportunity to be a significant volume player" in the industry.

Post continues after this video analyzing Tesla's recent quarterly report:
Tesla shares zoomed after Jonas released his report, though by afternoon trading the stock had dropped to $27.35 -- a 15% gain from Wednesday's close.

Tesla is best known for making a $109,000 Roadster that is out of reach for most consumers, and it has delivered 1,500 of those models so far. The company is developing a lower-priced sedan, which it says will be available next year. Jonas thinks that by 2025, Tesla will have sold half a million cars.

Jonas upgraded his rating on the company to "overweight" from "equal weight" and gave the shares a target price of $70.

An industry expert at J.D. Power & Associated thinks Jonas' expectations may be a stretch, according to Bloomberg. J.D. Power thinks electric cars will total only 2% of global sales by 2020 -- far lower than the 5.5% Jonas predicted.

"The obstacles are high upfront costs of the vehicle, the limited driving range and the lack of infrastructure," said Mike Omotoso at J.D. Power. "All those obstacles are going to take 10 years or more to overcome, and there are a lot of other alternatives consumers have to reduce gas consumption."

4Comments
Mar 31, 2011 5:59PM
avatar

The Best thing about Tesla as a company is the the US Federal Government has loaned the company 5 times what its worth with no collateral, and if the company fails, the American Taxpayer is on the hook, not the shareholders.  So in other words, It is Too Big to Fail.  I would sell now and then buy after it makes a short term plunge once Alternative energy stocks lose their luster.

 

There is no way that an average American can afford their cars, and until that happens, they will never compete.  I believe this report is merely speculation to drive prices up now.

Mar 31, 2011 5:33PM
avatar
My neighbor thinks I may be awesome in about 10 years. Why am I not getting anything?
Mar 31, 2011 5:09PM
avatar
Good time to short, if you think they will outdo the majors your wrong
Mar 31, 2011 4:50PM
avatar
Well, at least no one's recommending that you buy their cars...
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

117
117 rated 1
280
280 rated 2
478
478 rated 3
656
656 rated 4
650
650 rated 5
640
640 rated 6
647
647 rated 7
482
482 rated 8
277
277 rated 9
126
126 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
ITUBITAU UNIBANCO BANCO MULTIPLO S.A.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.