Tesla Inc. shares
grew 36% last month with positive delivery numbers and increasing analyst optimism, but Morgan Stanley threw cold water on the Tesla bull case on Thursday. Analyst Adam Jonas downgraded the stock from the same weighting to underweight and wrote about his concerns about the valuation and the underestimated risks to the company's China business. The share in premarket trading fell by around 4%. "The short-term momentum and mood regarding the stock is very strong, but we are ultimately questioning the sustainability of the momentum," he wrote. Jonas argued that the bull market in China was already priced in Tesla's stock, which doubled on a three-month basis as the S&P 500
SPX, + 0.84%
added 10%. "We continue to have concerns about whether a car company that commercializes advanced dual-purpose technology in economically sensitive industries could be a long-term winner in the Chinese market," he wrote. This is a risk not only for Tesla, but also for other automakers in its coverage universe, including Ford Motor Co.
and General Motors Co.
GM, + 1.14%,
Jonas raised its price target related to the downgrade from $ 250 to $ 360, reflecting the sharp rise in the stock in recent weeks.