‘$100 to $1,000 Per Share’: Morgan Stanley Maps Out Tesla Stock’s eVTOL Upside

Tesla (NASDAQ:TSLA) may be grappling with challenges in its core EV segment, but some view that business as merely a stepping stone toward larger ambitions.

Morgan Stanley analyst Adam Jonas, for example, has often banged the drum for Tesla, claiming it’s the ventures beyond EVs – particularly its potential in autonomous driving, AI and robotics – that merit getting excited about.

The analyst has recently also speculated whether Musk might be rethinking a business idea he’s long brushed off. For years, Musk has rejected the notion of Tesla developing eVTOLs or drones, but at a recent all-hands meeting, when asked about building a plane, Musk hesitated before responding that Tesla is already “stretched pretty thin.” To Jonas, that pause – and the answer – felt like a shift in tone.

Jonas is back on the subject of drones/eVTOLs again in a recent note following Ukraine’s large-scale drone strike. Last weekend’s attack involved 117 unmanned aerial vehicles targeting at least four Russian air bases. According to reports, the attack resulted in the destruction of dozens of high-value Russian strategic aircraft.

“If there is one event that could highlight the strategic role of drones in the AI era, look no further,” says the analyst.

According to Jonas, the market for eVTOL aircraft is poised to reach a scale investors can’t imagine right now. The Morgan Stanley team projects that the TAM for Urban Air Mobility could grow to $1 trillion by 2040. Looking further ahead, their forecast extends to 2050, by which time they expect the market to expand significantly, reaching around $9 trillion.

“We don’t think investors are prepared for the scope of this revolution,” says Jonas. “We estimate 1 eVTOL (electronic Vertical Takeoff and Landing) aircraft can generate as much revenue as approximately 15 ride share vehicles.”

And Tesla, he argues, is uniquely positioned to capitalize on that revolution. With deep expertise in manufacturing, material science, electric motors, battery tech, autonomy, and robotics, Tesla possesses the exact skill set needed to play a major role in what Jonas calls the “Low Altitude Economy.”

Whether it’s for commercial or potentially non-commercial use, the analyst sees a future where Tesla’s ambitions take to the skies – literally.

So, what could a portion of the eVTOL/Urban Air Mobility market be worth for Tesla? After modeling various scenarios using MS’s global eVTOL/UAM forecast, and when discounted to today’s value on a per-share basis, Jonas’ preliminary estimates suggest potential outcomes ranging from around $100 per Tesla share at the low end to roughly $1,000 per share – or even higher – at the high end.

That’s all quite speculative for now, though, and that scenario is not included in Jonas’ current model. For now, the analyst’s $410 price target implies shares will post gains of 35% over the coming months. Jonas’ rating remains an Overweight (i.e., Buy). (To watch Jonas’ track record, click here)

Jonas is on the bullish end of the Tesla spectrum but is amongst a minority. All told, the stock claims a Hold (i.e., Neutral) consensus rating, based on a mix of 16 Buys, 10 Holds and 11 Sells. Going by the $282.7 average price target, the shares will be going for a ~7% discount a year from now. (See TSLA stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.