It looks like the sector analysts at Morgan Stanley have found a new winner in the car industry of the future, component maker MBLY - never mind they crowned EV car maker TSLA to be the winner in this sector a while ago when MBLY wasn't even on their radar, more details below.
How did this all come to pass (by pure coincidence, for sure, note my slight sarcasm here) in recent months?
Since I already wrote many Instablogs covering TSLA (and sell-side analyst coverage of Tesla with various financial interest factors) let's focus on the MS coverage of MBLY this time:
In November 2013, Morgan Stanley published a 109-page report on the future of "Autonomous Cars".
This report was written by the same team that now covers Mobileye.
In all 109 pages, there are merely two passing references to MBLY, although it had been in business since 1999.
Nowhere in the report does Morgan Stanley even consider Mobileye to be the future of the ADAS or autonomous vehicles.
Fast forward 9 months and MS underwrites Mobileye's IPO plus its secondary. Magically, with only $40 million spent on R&D since IPO, Morgan Stanley has anointed MBLY as The Dominant Player in ADAS - now and as far as the eye can see: no competitive threats on the horizon for years... discounted cash flow models to 2029... complete nonsense and in complete contradiction to its own blue paper."
(Source, Citron's entire article is well worth reading)
Anyone who followed TSLA and MS' coverage of Tesla will find uncanny parallels in these turn of events.
How for the really funny part:
Let's assume for a moment that both scenarios in the TSLA and MBLY reports will magically become reality over the next 1-2 decades and the analysts at MS have been spot on:
1. First MS pumps TSLA to the moon (and should we say Mars) claiming that they will lead the car industry in upcoming autonomous mobility services ("TaaS", Transport as a Service or similar self-driving Uber-like car services) and with Tesla Energy.
2. Now comes the bull call on MBLY, a company offering sensors etc. for assisted driving (ADAS) and maybe fully self-driving cars in the future. TSLA happens to be just one of their many customers.
However, MBLY sells its products to MANY giant car makers out there (including for example HMC, Honda built the sensors into their lower-end, mass-market cars). As this news article states: "By [MBLY] winning 22 of the top 25 OEMs across 252 models...".
So which one is it?
Tesla dominating the industry with its unique proprietary AI car technology and services OR MBLY supplying such technology to ALL major car makers in the future?
My answer is simple:
You can't have both - unless you want to pump both stocks.
The two scenarios directly contradict each other.
Disclosure: I am/we are short TSLA.