Tesla Soars Over 10% After Morgan Stanley Signals '4-Baek-Sla' Era

"Let's go for 4-Baek-Sla (Tesla at $400)!" Global investment bank Morgan Stanley signaled the dawn of the so-called "4-Baek-Sla" era, sending Tesla shares soaring by double digits on September 11 (local time).

On this day, shares of electric vehicle maker Tesla closed at $273.58 on the New York Stock Exchange, up 10.09% from the previous session. This marks the largest single-day gain since January of this year. A surge in bargain hunting for tech stocks ahead of the release of inflation data, combined with Morgan Stanley's significant upward revision of Tesla's target price in its latest report, fueled the double-digit rally. Based on the closing price, Tesla's market capitalization reached approximately $868.3 billion, adding nearly $80 billion in a single day.

[Image source=Reuters Yonhap News]

The Morgan Stanley team, led by analyst Adam Jonas-widely regarded as Wall Street's leading Tesla analyst-raised Tesla's target price by a remarkable 60%, from $250 to $400, and upgraded its investment rating to "Overweight." Jonas stated, "Tesla's supercomputer 'Dojo' will open up entirely new markets that far surpass car sales," predicting that "it could add more than $500 billion to Tesla's valuation." According to Morgan Stanley, Dojo is expected to accelerate the introduction of Tesla's autonomous robotaxi service, enabling the company to generate new revenue streams from future sales of full self-driving (FSD) related software and hardware.

In particular, the Morgan Stanley team described Dojo's potential as part of the "Muskonomy" (Musk + economy), drawing comparisons to Amazon Web Services (AWS), which dramatically boosted Amazon's profitability in the past. They emphasized, "Investors have long debated whether Tesla is a car company or a tech company. We believe it is both, but the greatest value lies in software and service revenues." They also noted that investors should pay attention to the latest version of Tesla's full self-driving system, set to be unveiled later this year, as well as the next AI Day expected early next year. Previously, Tesla CEO Elon Musk told investors in July that the company would invest more than $1 billion in Dojo development next year.

On Wall Street, some view Morgan Stanley's analysis as overly optimistic. According to FactSet, Morgan Stanley's target price is currently the highest among Wall Street analysts. Deutsche Bank, which is also optimistic about Tesla, set its target price at $300. Tesla shares have risen more than 120% so far this year, ranking among the top performers in the S&P 500. However, the stock still remains below its all-time intraday high of $414, recorded in November 2021.

Meanwhile, the New York stock market closed higher across the board, led by a rally in big tech stocks including Tesla. The tech-heavy Nasdaq index rose 1.14% from the previous session. The Dow Jones Industrial Average and the S&P 500 index also ended the day with solid gains.