Morgan Stanley makes cuts across its auto coverage, Tesla price target gets cut

Yahoo Finance Live anchors discuss Morgan Stanley's push to make cuts across its auto coverage.

Video transcript

JULIE HYMAN: So, one of the other things that we are watching now is Tesla. And that's because Morgan Stanley is out with a new note, Adam Jonas over, there across the auto coverage talking about a bunch of different things that are pushing on the industry, slowing growth, headwinds from credit. One of the big names that was mentioned in this note was indeed Tesla, but really, cut price targets on a number of different companies in its coverage universe.

BRIAN SOZZI: Yeah, Adam Jonas, a friend of the show. Always enjoy his notes. I'm eh. I'm eh on this note.

He's still staying in overweight rating on Tesla into earnings. He still thinks Tesla can leverage its cost leadership and EVs to aggressively expand its user base. So more the same from Jonas, longtime bull in the name.

JULIE HYMAN: Yeah, at the same time, we also have an initiation of coverage of Tesla here this morning as well, that coming from Truist and William Stein over there who interestingly covers semiconductors. And he's got an initiation with a buy rating here this morning, for what it's worth. So that's obviously more the consensus view on Tesla, right? That he's got $1,000 price target, for example, and that AI innovation should turbocharge core EV growth. Those AI innovations that he's highlighting, even as the head of AI at the autopilot program just announced yesterday that he's no longer with the company.

BRIAN SOZZI: Can we just stay on cars for a second? This BMW story about charging people for, what, heated seats?

JULIE HYMAN: Yes.

BRIAN SOZZI: I hope this is not a look into the future. I am not paying $50 a month for AC or heat in my car. I mean, this is ridiculous.

This now seems to be what started I think as a joke amongst the automakers, because they couldn't get semiconductors into cars, now it's starting to turn what appears to be a big, real business model for them. I'm not paying for these things. It's ridiculous.

JULIE HYMAN: I don't know if it's a big, real business model when one automaker is doing it, but let's hope it doesn't spread--

BRIAN SOZZI: I hope it doesn't.

JULIE HYMAN: --to the other ones.

BRIAN SOZZI: I mean, would you pay for heated seats?

JULIE HYMAN: No.

BRIAN SOZZI: No?

JULIE HYMAN: No.

BRIAN SOZZI: You don't need heated seats.

JULIE HYMAN: You don't really need heated-- I don't know.

BRIAN SOZZI: They have to draw the line somewhere.

JULIE HYMAN: Buy one of those old school, fuzzy seat covers.

BRIAN SOZZI: Yeah. Everybody wants to be the Netflix of everything, Julie. They all want to create and grow subscribers.

JULIE HYMAN: Subscription revenue.

BRIAN SOZZI: And create recurring revenue and become a [? Miles ?] [? Alden ?] favorite SaaS play, but can't do that. When you sell a car for $150,000, you want heated seats. You don't want to pay more for heated seats.

I'm very fired up about this. I think it's terrible. Shame on BMW.

JULIE HYMAN: All right. I was not expecting a discussion on this.

BRIAN SOZZI: I'm just living in the moment. Living in the moment.

JULIE HYMAN: But I'm glad that now everybody knows how you feel about it.