- On Thursday, Morgan Stanley downgraded Tesla to “underweight” from “equal-weight.” It’s the first time the bank has recommended selling Tesla since 2012.
- The downgrade comes amid a record rally for Tesla. At the stock’s current valuation, Morgan Stanley sees more downside risk than upside, according to the Thursday note.
- Shares of Tesla fell as much as 4% in early trading Thursday.
- Watch Tesla trade live on Markets Insider.
Morgan Stanley just downgraded shares of Tesla to “underweight,” the equivalent of a sell rating, for the first time in more than seven years.
The Thursday downgrade comes after a record rally where Tesla gained more than 100% in just four months on solid 2019 vehicle delivery numbers and optimism around its factory in China. The last time Morgan Stanley recommended selling the electric-car maker was in September 2012, according to Bloomberg data.
“Near-term momentum and sentiment around the stock is admittedly very strong, but we ultimately question the sustainability of the momentum,” Adam Jonas of Morgan Stanley wrote in a Thursday note. He also lowered his valuation for the company’s mobility unit and increased his expectations for the core auto business, resulting in a higher target price.