Elon Musk's bitcoin obsession may be why Tesla is going through a dry spell, Morgan Stanley analysts say

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Elon Musk's bitcoin obsession may be why Tesla is going through a dry spell, Morgan Stanley analysts say
Tesla CEO, Elon Musk.Hannibal Hanschke Pool / Getty Images
  • Elon Musk's bitcoin craze explains why investors aren't focused on other aspects of the company, according to Morgan Stanley.
  • "Might Tesla-bitcoin fever may be telling us something about the lull in Tesla sentiment?" analysts said.
  • The bank laid out 5 areas that can compete for investor attention through the end of 2021.

Investor focus on Tesla's bitcoin interest may be why the electric vehicle maker is going through something of a lull right now, Morgan Stanley analysts wrote in a Monday note.

"Over the past couple of months, incoming client interest on Tesla is focused mostly on Chinese sales/production data and Elon Musk's tweets regarding bitcoin," analysts Adam Jonas, Billy Kovanis, and Evan Silverberg wrote. "Might Tesla-bitcoin fever may be telling us something about the lull in Tesla sentiment?"

Musk's tweets about bitcoin have had a huge impact on its volatility. His comments have triggered accusations of pumping and dumping to profit from big price swings along with renewed calls for a regulatory investigation.

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Bitcoin recently had a solid run after Musk changed his mind about it, tweeting that Tesla would resume payments in the token when its clean energy usage reaches 50%.

"You just know it's a rather dry spell for Tesla when bitcoin is the dominant new story and dominant driver of investor discussion day in, day out," Morgan Stanley's analysts said.

More fascinating than working out the Tesla-bitcoin relationship is that there's a virtual "vacuum" of developments in other areas of advancement it's involved with on renewables, storage networking, and transportation, they said.

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Morgan Stanley has a 12-month price target of $900 for Tesla. Analysts laid out five other areas that can compete for investor attention through the end of 2021:

  • Capacity expansion outside China in markets like India, Southeast Asia, Northern and Central Europe, and the US
  • Model expansion into commercial, rideshares, and affordable segments
  • Battery manufacturing expansion or inclusion of third-party supply to other original-equipment manufacturers
  • Expansion of its full self-driving software subscription service
  • Entrance into the Property & Casualty insurance market as an opportunity to monetize on car real-estate

Tesla's shares were last trading 0.4% lower at $597 per share on Wednesday. Its stock is down 15% so far this year. Bitcoin fell 2% to around $29,200, but is up 34% year-to-date.

Read More: Billionaire hedge fund manager Paul Tudor Jones says to 'go all in' on inflation trades if the Fed stays nonchalant about rising prices. Here are 3 trades from top investors, and 3 hedging strategies if the Fed delivers a surprise U-turn.

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