Tesla investors express bearishness on stock: Morgan Stanley

Morgan Stanley Analyst Adam Jonas is finding investor sentiment on Tesla (TSLA) to be turning bearish, he expressed in a recent note. Yahoo Finance Autos Reporter Pras Subramanian breaks down the three biggest factors Morgan Stanley found to be driving this shift.

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Editor's note: This article was written by Luke Carberry Mogan.

Video transcript

[AUDIO LOGO]

ALEXANDRA CANAL: Welcome back to Yahoo Finance. Tesla in focus today after big-money institutional investors appear to be turning bearish, with some believing the stock will underperform over the next six months. That's the takeaway from an informal poll by Morgan Stanley. Important to note that analyst Adam Jonas does not agree with the sentiment, remaining overweight on shares, but he does see some roadblocks ahead. Yahoo Finance's autos reporter Pras Subramanian is here with more. And Pras, Adam Jonas, typically a big Tesla bull. What are the concerns here?

PRAS SUBRAMANIAN: Well, they held these institutional lunches, right, with their big, big shareholders every now and then, in this case, it's Tesla shareholders. And it turns out that the big headline here is, like you mentioned there, all of them at the luncheon said that Tesla will underperform in the next six months, and almost all of them said over the next 12 months. So they're kind of concerned that-- these guys own a lot of shares, but they're concerned the actual share itself will kind of stay where it's at through the next year.

Why is that? So there's a few kind of concerns here. Number one, obviously Musk sidelining AI growth, with his tweets about wanting to control the company otherwise he wants to take AI out of Tesla. That's sort of a big driver for potential future earnings for the company down the line. Also, volume growth, there's concern that Tesla may not grow their volumes, and potentially even have negative growth with volumes. And just this past quarter, they had about 35% growth over year-over-year. So the concern is that we're going to have some issues with, not just the AI stuff but also the fact that the company may not grow as much, too.

JOSH LIPTON: And this is all coming, Pras, through, as we hear about they're upping some pricing on some Tesla vehicles, right?

PRAS SUBRAMANIAN: Yeah. For the Model 3, the new upgraded Model 3 going to see a price hike here of $1,500, which is actually kind of surprising given the fact that we've seen so many price cuts in the past, notably starting in January. But this is a new model. There might be more demand for it. It's better suspension, better interior components, just a better car overall. So I'm not surprised that it might be seeing some lift here, but you're noting that right here that right now, with that price hike, it's going to be the same price as the RWD Model Y, which is very interesting because that's their big volume mover. So interesting to see that the Model 3, which has historically been much cheaper than the Model Y now almost reaching that price parity there.

ALEXANDRA CANAL: Well. Pras, Tesla always one of those names that we love to track. Thank you so much for breaking it down for us.