Morgan Stanley analysts, led by Adam Jonas, cut Tesla's (TSLA) price target to $320 from $345. The firm is maintaining its Overweight rating on the EV maker while cautioning that Tesla could report a loss this year on decelerating EV demand.

Yahoo Finance Live examines Jonas' note to investors.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

[MUSIC PLAYING]

JOSH LIPTON: Let's check in on some of the top calls of the day. We start with Tesla shares. They're dropping for a third day in a row. Today's news, Julie, is that a very well known Tesla bull. That would be Adam Jones from Morgan Stanley.

Adam takes out the red pen and starts cutting. He does maintain his buy rating, we want to stress that, but does cut his price target, takes that down to 320, and tells his clients the company could report a loss this year based on GAAP accounting. EV demand slowing, he tells them. Companies are dumping their EVs. Hybrids competing for the marginal EV buyer, he says.

And this coming, of course, is Tesla's stock has really suffered a rough slide so far this year. We're down about 30% now.

JULIE HYMAN: Yeah. I mean, you could argue even that Jones is a little bit late to the party. I mean, a lot of what he talks about in his note is stuff that other people who are not as sanguine on Tesla have been talking about in this market already.

One of the interesting points here, he says that Tesla's product is relatively aged, that it is, you know, that the other-- well, the other major automakers are sort of earlier in their cycles, which has been a disadvantage for them. At this point, he says, maybe Tesla's product is not as exciting. And, you know, many analysts on the Street are waiting of course for them to come out with their next mass market automobile.

So that's something to consider as well. He's also talking about the penetration of Tesla in the mature markets like California, for example, already. And he also, of course, talks about competition in China.

JOSH LIPTON: Yeah. I mean, you read this note, it was so downbeat. You kind of felt like why is he still overweight. He explains to his clients, listen, because I think it's an auto stock, but I also think it's an energy play and AI play a robotics play. So he's sticking with it despite what he acknowledges is just overwhelmingly, he says, bearish sentiment at this point.