Tesla Seen By Tech Investors As 'Apple 20 Years Ago', But More Likely a Competitor Than a Partner - Morgan Stanley's Huberty

Tesla and Apple, often seen as potential technology partners, are more likely to grow as competitors, says Morgan Stanley analyst Katy Huberty.

Tesla Inc.  (TSLA) - Get Report and Apple Inc.  (AAPL) - Get Report are unlikely to become technology partners, Morgan Stanley analyst Katy Huberty said in a client note published Thursday, but the clean-energy carmaker might be on a path similar to the iPhone giants over the next two decades.

Huberty, a highly-influential Wall Street analyst with a track record for accurately forecasting Apple earnings, told her colleague, Tesla analyst Adam Jonas, that the two companies will be viewed as competitors in the years ahead, with vertically integrated solutions that would make a partnership unlikely. 

Tech investors, Huberty said, "View Tesla in a way they viewed Apple 20 years ago: a company that thinks differently, that is incredibly innovative in a category that needs a spurt of innovation."

"That creates investor interest. If there’s a path to profitability and reason to believe scale will continue to increase, then tech investors tend to not care as much about valuation and/or are will to look multiple years into the future when scale and profitability will support current valuation," she added.

Tesla shares were marked 0.5% higher Thursday at $819.20 each, but have risen nearly 95% so far this year as Elon Musk's group rolled out new models and boosted profitability amid record quarterly deliveries. 

Apple shares, meanwhile, were marked 0.1% lower at $319.00 each, weighed down by U.S.-China trade tensions and a pullback in broader equity markets, but have gained 8.5% this year against a 13.8% decline for the Dow Jones Industrial Average. 

Tesla produced just under 103,000 cars over the three months ending in March, with deliveries pegged at 88,400, the best first-quarter total in the company's history, and stuck to its guidance of delivering 500,000 cars this year.

Apple beat Street estimates for both its top and bottom line over its fiscal second quarter, posting sales of $58.3 billion and earnings of $2.55 per share for the three months ending in March.

The results were even more impressive considering iPhone revenues fell 6.7% to $29 billion as stores in China, and around the world, were shuttered as a result of the coronavirus outbreak.

Apple said services revenues picked up some of the slack, rising 17% to a record $13.3 billion as shelter-in-place orders attracted new subscribers to the group's suite of cloud-based offerings such as Apple Music and Apple Pay.

Apple's services subscriber base hit 515 million over the second quarter, Cook said, while its installed base -- a measure of the number of iPhones, iPad, and computers in circulation -- topped 1.5 billion.