Shares of Tesla Inc. TSLA,
rose 0.9% in morning trading on Wednesday after Morgan Stanley analyst Adam Jonas raised shares to overweight by the same weight. He also raised his price target to $ 540 from $ 360. Jonas writes that Tesla is “on the verge of a profound change in the model from car sales (volume x price) to generating high margins, periodic revenues from software and services.” He claims that the company’s automotive business provides “an entrance ticket to unlock much larger ones.”
; [total addressable markets]”The company already receives some revenue from services from things like first-class infotainment services and performance improvements, and Jonas estimates that these companies account for about 1% to 2% of Tesla’s revenue today. By 2030, the services could represent more than 6% of revenue and 18% to 20% of profit before interest, taxes, depreciation and amortization, he said. “value creation stemming from Tesla’s monetization of major strengths driven by best-in-class software and ancillary services,” Jonas writes. vehicles, allowing Tesla to “lead the industry in reducing the prices of its products” while seeking to transform vehicle owners funds in “subscribers” of Tesla’s services. Tesla shares have gained 18% in the last three months as the S&P 500 SPX,
has grown by 6.5%.