Tesla's most prominent bull on Wall Street may have downgraded the stock, but the charts are pointing to a record run ahead for the nation's most valuable automaker.
Tesla shares fell by about 3 percent Monday after a downgrade to equal weight by Morgan Stanley analyst Adam Jonas. He cut his rating on the electric car maker due to concerns that other big technology companies will eventually clash with Tesla.
"The bull case on Tesla is that it can become the next Amazon or Apple. We see such firms as competitors ultimately. We question whether the risks of going head-to-head vs. the tech giants is sufficiently discounted in the price," Jonas wrote. "We expect much larger and more well-capitalized competitors to unveil strategies that directly address sustainable transport and mobility."
In the Monday report, Jonas maintained his $305 price target on the stock. After a nearly 50 percent rally for Tesla this year, that target now implies a decline.
But that's not stopping Rich Ross of Evercore ISI or Eddy Elfenbein, editor of the Crossing Wall Street blog, from making a case that the stock is heading higher.
Ross, a technical analyst, says the charts continue to look bullish.
"Admittedly, this is one of the most divisive stocks on Wall Street," Ross said Monday on CNBC's "Trading Nation." "But the stock chart is far more definitive, and for me, it's still a long, with over 20 percent upside from current levels."
On a longer-term chart of Tesla, he points to a trading range of between $180 and $280 that had been in place for the stock since 2014. Ross' chart shows that the company recently broke out of that $100 range when it made record highs this month, leading the technician to believe that it has another $100 to run.
In other words, Tesla could soar to $380.
"It's a compelling technical breakout [and that] short interest [on the stock] gives you that potential catalyst as well," said Ross. "I like the stock chart."
From a fundamental perspective, making the bull case on a company valued at more than $50 billion despite losing hundreds of millions of dollars each year can pose a challenge. But Elfenbein says that "unconventional" Tesla cannot be looked at like any other stock.
Jonas "says the company is burning through enormous amounts of cash; well, we knew that already," Elfenbein said Monday on "Trading Nation." "They're not going to run out — they have plenty of resources to get more cash."
"The stock belongs in your portfolio, a modest portion," Elfenbein said, adding, "But expect it to be very erratic, and don't expect it to follow the rules."
Tesla isn't currently on Elfenbein's "Crossing Wall Street buy list, but the list has a history of coming close to or even beating the S&P 500's total return since 2006.
To be sure, Jonas is far from the only analyst to suggest investors approach the stock cautiously. The most common rating is hold, and the median analyst price target on the now-$316 stock is $240, according to FactSet data.
