Morgan Stanley’s Adam Jonas, a prominent Tesla (TSLA) bull, issued a stark warning to shareholders following CEO Elon Musk’s announcement that he was launching the “America Party,” a new political venture targeting strategic congressional seats.
Jonas cautioned investors to brace for continued political distractions, writing that they “should be prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk’s political priorities which may add further near-term pressure to TSLA shares.”
The warning comes as Tesla stock plummeted nearly 7% on Monday, July 7, erasing over $68 billion in market capitalization. Jonas believes Musk’s political activism represents “part of a planned strategy to achieve a specific goal” rather than random involvement, suggesting these distractions aren’t temporary.
Tesla’s fundamentals remain challenged, with Q2 deliveries declining 14% year-over-year to 384,000 vehicles. Morgan Stanley projects another 13% volume decline in the second half of 2025.
However, Jonas maintains optimism around Tesla’s pivot to robotics and AI. He calculates that replacing just 10% of Tesla’s 125,665 employees with humanoid robots could generate $2.5 billion in value, at an approximate net present value of $200,000 per unit.
With earnings approaching on July 23, Jonas expects Tesla to emphasize its robotaxi roadmap and potentially announce an AI Day to recruit talent, positioning Tesla’s future beyond traditional automotive manufacturing.
Analysts tracking Tesla stock expect Q2 revenue to fall by 11% year over year to $22.4 billion while adjusted earnings are forecast to narrow by 20% to $0.41 per share.
Tesla has failed to beat revenue and earnings estimates in four of the last five quarters. The EV maker missed revenue estimates by 9.3% and earnings estimates by 37% in Q1, but TSLA stock still gained 5.4% following the release of its results.
Tesla’s earnings underperformance is forecast to continue for the rest of 2025. According to consensus estimates, Tesla is expected to report an earnings decline of 25% compared to the 7.4% earnings growth for the S&P 500 index this year.
Tesla shares have declined 22% year-to-date as the company faces weakening EV demand, political uncertainty, and CEO Elon Musk’s controversial leadership style. Despite trading at a premium adjusted forward earnings ratio of 170x, Tesla’s fundamentals are deteriorating.
