Tesla, Wall Street's Most-Shorted Stock, Downgraded By Morgan Stanley

Tesla shares, which have doubled in value over the past six months, were downgraded to 'underweight' by Morgan Stanley Thursday, while data suggests its Wall Street's most-shorted stock.

Tesla Inc.  (TSLA) - Get Report shares retreated further from all-time highs Thursday after analysts at Morgan Stanley cut their rating on the clean-energy carmaker to 'underweight', citing concerns for the sustainability of the stock's recent surge.

Morgan Stanley analyst Adam Jonas, however, lifted his price target on the stock by $110, to $360 per share, to partly reflect the more than 35% gain the  shares have seen over the past month as the group topped Street estimates for 2019 deliveries and cut the tape on its massive production facility in China. 

"Near-term momentum and sentiment around the stock is admittedly very strong, but we ultimately question the sustainability of the momentum," Jonas said, adding "We believe the current share price discounts a fully ramped up China, Berlin and Model Y."

"We are increasing our expectations for the core auto business and decreasing our expectations for the mobility business, resulting in a net material increase in our target price," Jonas said. "Our revenue forecast through 2030 increased approximately 10% on average vs. our prior forecast, culminating in a roughly 300,000 unit increase by 2030 (to a total of 2 million units in annual volume) vs. our previous forecast of 1.7 million in volume by 2030." 

Tesla shares were marked 3.45% lower in early trading Thursday to change hands at $500.63 each, a move that would still leave the Elon Musk-founded group with a $91 billion market value and a six-month gain of more than 100%.

The Morgan Stanley downgrade follows a report that suggests Tesla is once again the most shorted stock in the U.S. market, overtaking Apple Inc. AAPL -which has a market value of more than $1.4 trillion.

Investors have borrowed $14.5 billion to bet against Tesla shares, data by financial analytics firm S3 Partners and published by Bloomberg, just ahead of the $14.3 billion short against the iPhone maker.

Tesla hit an all-time high of $547.41 earlier this week after analysts at Oppenheimer boosted their price target to a Wall Street high of $612 per share and called for its inclusion in U.S. equity benchmarks. 

Oppenheimer's Colin Rusch nearly doubled his existing price target for Tesla, which he set in late October at $385 per share, to $612 per share in a client note that argues the group has reached "critical scale" to support sustainable free cash flows. 

He also suggests the Elon Musk-controlled company could pose and "existential threat" to transport companies that do not have the ambition or the ability to innovate at Tesla's torrid pace.