Currently, Wall Street has a total of 28 “Buy”, 19 “Hold”, and 16 “Sell” ratings for Tesla.
Morgan Stanley has lowered its rating on Tesla from “overweight” to “equal-weight,” marking the bank’s first adjustment on the stock since June 2023 and drawing broad attention from capital markets.
Despite the more cautious stance, Morgan Stanley raised its price target from $410 to $425, though the new target still implies about 6.5% downside from last Friday’s close.
In his first report as the bank’s new lead analyst for Tesla research, Andrew Percoco wrote that the company’s current valuation no longer supports a bullish call, and that Tesla’s trading environment is likely to remain volatile through 2026.
Tesla’s forward P/E ratio—based on consensus earnings estimates for the next 12 months—stands at roughly 210x, the second-highest in the S&P 500, trailing only Warner Bros. Discovery.
Morgan Stanley’s downgrade centers on Tesla’s valuation structure. While markets broadly view the company as having moved beyond a traditional automaker into a technology platform, expectations for nearly all of its non-auto businesses are already priced into the shares.
The bank estimates that Tesla’s enterprise-value-to-EBITDA multiples remain stretched. Based on consensus estimates, the company trades at 30x EBITDA for 2030—rising to 48x under Morgan Stanley’s in-house model.
Notably, the bank’s most optimistic assumptions hinge on the humanoid robot program, Optimus—valued at $60 per share in its model, and seen as a field where Tesla “is poised to become a leader.”
Concerns in financial markets are not unfounded. According to Tesla’s Q3 2025 results, revenue rose 12% year-on-year to $28.1 billion, while net income dropped 37% to $1.373 billion. Adjusted net income fell 29%.
Operating margin slipped to 5.8%, nearing a five-year low. The company attributed margin pressure to higher R&D spending, elevated administrative costs, increased stock-based compensation, and lower one-off FSD revenue recognition.
On the business side, Tesla continues to invest in new growth segments. The company plans to add a new facility dedicated to mass-producing Optimus robots at its Texas Gigafactory, targeting annual capacity of 10 million units. Meanwhile, the Robotaxi fleet is expected to double next month.
However, commercialization timelines for both initiatives remain unclear. At the same time, Tesla faces softening U.S. EV demand, with Morgan Stanley projecting a 12% decline in the company’s North American sales next year.
External pressure is rising as well. In early December, famed investor Michael Burry criticized Tesla’s valuation as “absurdly high,” a remark that resonated more strongly as Tesla’s profitability weakens.
Wall Street remains divided: the stock currently carries 28 “buy,” 19 “hold,” and 16 “sell” ratings, reflecting an ongoing push-and-pull between Tesla’s long-term technology ambitions and its near-term earnings pressures.
On December 8, Tesla shares fell as much as 3.39% intraday and closed at $439.58, marking the largest single-day decline in a week.
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