In an invitation-only call with institutional clients of Morgan Stanley on Wednesday, research analyst Adam Jonas — a long-time Tesla bull — expressed skepticism about the electric vehicle maker and said not to count on a buyer like Apple to bail the company out.
"Tesla is not really seen as a growth story," Jonas said on the call, which CNBC heard in a recording. Today, "It seems like a distressed credit and restructuring story."
Some details of the call were previously reported by Business Insider.
Jonas spent some time on the call responding to the hope that a big tech company like Apple or Amazon might buy Tesla. In a CNBC interview on Tuesday, analyst Craig Irwin of Roth Capital Partners rekindled the rumor that Apple once made a bid for Tesla.
But Jonas poured cold water on the notion of a big tech acquisition today.
He explained, "For risk mitigation and liability containment, they may not want to expose themselves to the unlimited liability of being involved in owning a business where occasionally a car catches on fire, takes down a building, or accidentally kills a pedestrian or passenger, things that happen. The auto industry has an ugly side to it. The roads are very dangerous. There's a lot of stored energy in a vehicle. And the regulatory environment [around autonomous cars] has not had time to cure yet."
Jonas acknowledged that Apple has interest in transportation (as do Amazon and other big tech firms). But Morgan Stanley's tech researchers, he said, don't expect Apple to have a service or related hardware devoted entirely to transportation until the 2030s.
He added, "Perhaps those big tech firms don't want to expose themselves to that up front. And moreover they realize the autonomous race is more of a marathon where over a 10- or 20-year period you collect real world miles. There may be other ways to do that besides owning a full-stack, awesome, great auto company."
Apart from shooting down the idea of a white knight, Jonas also expressed skepticism about the company's current state.
"In late 2018, demand was exceeding supply, cash flow was strong, there was a ton of excitement around the Model Y," Jonas said. "Today -- supply exceeds demand, they are burning cash, nobody cares about the Model Y."
Finally, Jonas told investors that, given the precedent of Tesla's acquisition of SolarCity, there's a possibility Musk could use his 54% stake in SpaceX, a company that has a post-money valuation of $31.5 billion, to eventually collateralize Tesla.
"There's a precedent for Elon Musk to think across his portfolio of companies," he said.
Jonas said near-term, Wall Street is expecting Tesla to deliver just 70,000 vehicles in the second quarter of 2019. While he and Morgan Stanley have a more optimistic estimate of 82,000 vehicles, that still falls short of Tesla guidance. The company said it would deliver 90,000 cars this quarter, and wrote in a first-quarter shareholder letter:
"Although we are driving towards higher internal goals, we reaffirm our prior guidance of 360,000 to 400,000 vehicle deliveries in 2019, representing an increase of approximately 45% to 65% compared to 2018."
Tesla and Morgan Stanley did not immediately respond to requests for comment on the call.
Morgan Stanley was a lead underwriter in Tesla's $2.7 billion offering of stock and convertible notes, which closed earlier this month. The week of the offering, Morgan Stanley said it saw the funding as a 12-month bridge to help the company gain a foothold in China.
Tesla's stock is down 15% since last Thursday, and dropped 6% on Wednesday to under $193. The slide began last week after an e-mail surfaced in which Tesla CEO Elon Musk urged employees to cut spending and told them he would personally oversee outgoing expenses.
That news was followed by a bad Consumer Reports review of Tesla's new Autopilot Navigate feature in its Model 3 electric sedans. The stock may also be reacting to ongoing trade tensions between the US and China, as Tesla has staked its future on building and selling its cars there.