Morgan Stanley Analyst: Tesla Valuation Can Become Bigger Than Apple

On Wall Street, depending on the metric you are tracking, size matters.

So it is with market cap and sales. The bigger the better, some say. In the case of tech behemoths, Apple is a yardstick for market cap and multiples. And in one recent debate, Morgan Stanley has weighed in on how Elon Musk’s contention that the valuation of Tesla Motors can be bigger than the valuation of Apple might come to fruition.

An analyst with Morgan Stanley, Adam Jonas, said in a research note published Monday (June 12) that valuation of Tesla Motors can trump Apple only if the company capitalizes on, of all things, data. That would mean some additional time, energy and focus spent beyond core operations such as vehicles including the Model 3 or even solar businesses. Jonas said the market for data is big enough that Tesla stock can indeed push past Apple stock in terms of valuation.

“In our view,” Jonas said in his note, “there’s only one market big enough to propel the stock … to the levels of Elon Musk’s aspirations: that of miles, data and content.”

As the site note, Tesla cars operate not just as vehicles but are also able to receive and send data across networks, and this fact, beyond routine maintenance-related statistics, can also boost the value of driving a Tesla car itself, based in part on additional content and services.

“Any number of firms (and funds/consortiums) across the tech stack have been making big moves to get closer to the 10 trillion miles traveled annually by the global car population,” the analyst said.

His research maintains a $305 price target on Tesla Motors stock, with a “bear” case valuation that has been boosted from $50 to $175 and a “bull” case valuation of $511, whereas the stock was recently trading at $381. The bear case is based on valuation multiples that have been seen as Intel acquired autonomous vehicle tech firm Mobileye.