Tesla shares won’t stop falling unless the electric vehicle maker enacts some serious changes, according to Morgan Stanley. Analyst Adam Jonas said investors are unwilling to accept further downward revisions in earnings and free cash flow forecasts despite believing in the longer-term outlook for the company. He said the retail investor favorite will likely take another move down. Tesla stock closed Tuesday below the $220 level, meaning it has lost about a quarter of its value since notching July intraday highs above $295. Despite the pullback, it is still considered a strong year for the stock as shares are up about 78% compared with the start of 2023. “Macro aside, for Tesla shares to avoid the next price move being down, investors must have confidence in the company’s ability to grow earnings and address new markets both within and beyond core auto,” Jonas told clients. “Tesla investor sentiment is low, but that’s not enough by itself to halt the negative momentum.” TSLA YTD mountain Tesla stock this year But there are a few things Tesla can do to halt its tumble and reestablish itself as a leader, Jonas said. It should do at least one of these to get its shares back on track, he said. One thing that would help turn the stock around would be for the company to, put plainly, “stop missing numbers.” Jonas pointed specifically to the fact that the 2024 fiscal year consensus estimate for earnings per share sits at $3.94, down from $7.30 a year ago. Executing model expansion on the Cybertruck and other models outside of the S, X, 3 and Y families could help investors’ sentiment, he said. Jonas noted the bar for the Cybertruck has been significantly lowered. When it comes to expanding the total addressable market, Tesla should focus on capital-light businesses, Jonas said. That would mark a change for the company, which he said currently has a business model at maximum capital intensity with as high of a focus on automotives as possible. In the next six to 12 months, Jonas said he’s specifically watching for a focus on capital-light projects such as licensing and software that can help expand Tesla’s relevance beyond the auto industry. He also said Tesla will need to show a genuine connection to artificial intelligence through products that can better the customer experience to defend its multiple. That comes as AI has captured investor interest as the technology has become more widely accessible. In turn, a group of stocks seen as ways to play the trend have soared this year. — CNBC’s Michael Bloom contributed to this report.