Tesla Stock (TSLA) Downgraded at Morgan Stanley: Here’s Why

Tesla's stock (NASDAQ: TSLA) experienced a notable shift in analyst sentiment as Morgan Stanley downgraded the electric vehicle giant, with the stock price 0.84% lower in overnight trading. The downgrade reflects concerns over near-term growth prospects and competitive pressures.

Tesla shares are facing increased scrutiny after Morgan Stanley's adjustment. The stock's performance is closely tied to broader market perceptions of the EV sector, and any revisions in analyst outlooks can trigger immediate price reactions. The recent downgrade to “Equal Weight” from “Overweight” suggests a more neutral stance on Tesla's potential for outperformance in the near term.

The core of the downgrade stems from a revised outlook on Tesla's valuation relative to its long-term growth prospects. While Morgan Stanley acknowledges Tesla's potential leadership in autonomous mobility, renewable energy, and robotics, the firm believes the current share price, trading at 30 times estimated 2030 EBITDA, already reflects much of this anticipated growth.

This suggests limited upside potential in the near term, leading the analyst to favor a more cautious approach. Morgan Stanley's 2026 auto volume forecast for Tesla is now 13% below consensus, signaling concerns about the company's ability to meet market expectations amid intensifying competition and evolving consumer preferences.

The downgrade reflects a broader industry context where electric vehicle manufacturers face increasing competition and evolving market dynamics. This shift in sentiment could impact Tesla's stock price, potentially leading to increased volatility as markets take note of the revised outlook.