Tesla Inc (TSLA): This Tech Guru Sees Big Market Share Gains Ahead

Loup Ventures' tech expert Gene Munster is out with enthusiasm for Tesla after seeing survey results gauging Model 3 intrigue.


Tesla Inc (NASDAQ:TSLA) has one of the tech-verse’s best experts in its bullish camp, betting that more consumers than you realize would be enticed to invest in a mass-market Model 3 car.

Gene Munster – serving up a slice of confidence from his research-driven, venture capital firm Loup Ventures – polled 519 people in the United States over the course of last week. The purpose? To gauge interest levels in springing for TSLA’s Model 3.

The verdict: “We found a surprisingly high number (17%) of people would buy a Model 3 at $40,000. Even if this survey is off by 3x, the results still imply significant market share gains are in store for TSLA given their current U.S. unit market share is below 0.5%,” asserts Munster.

Though the analyst notes that with any first-time survey comes its own set of “limitations,” but nonetheless, he believes these insights are “still valuable.” Within the next decade, Munster bets TSLA could grab 17% of the domestic auto market share, which aligns with his survey outcome. However, Munster acknowledges that it is far easier said than done for a consumer to think about shelling out a whopping $40,000; it is “harder for them to actually do it.”

All the same, Munster makes a valid bullish point in favor of even a fraction of the interest seen in his survey for the Model 3: “Our optimism regarding this initial survey is based on dialing back the intent to buy by 60%, which would still indicate significant market share gains.”

Munster predicts the electric car giant’s market share will rise from 0.5% to 1.5%. For the fourth quarter, TSLA had delivered 1,772 Model 3 vehicles. By the first quarter of 2018, Munster anticipates TSLA can hit 14,000 and reach 168,000 deliveries for the new year- assigning a 70% probability for the company to “actually hit those numbers.” In fact, between TSLA’s Model 3, Model S, and Model X vehicles, Munster looks for the company to take a 1.5% chunk of every car sold in the U.S.

Ultimately, “Ramp in Model 3 production won’t be linear,” Munster concludes, but believes this is all to be expected: “As Model 3 production scales to meet this backlogged demand, it will not be a smooth ramp from ~1,000 vehicles per week today to their goal of 10,000 per week. Steps up in output require factory retooling and significant capex investment that will cause temporary steps down in production. In other words, don’t be alarmed by the inevitable news of Model 3 production issues, as it may be part of the natural process of scaling production.”

TipRanks points to a largely wary Wall Street not ready to take the gamble on CEO Elon Musk’s electric car empire. Out of 20 analysts polled in the last 3 months, just 5 are bullish on TSLA stock, 8 remain sidelined, while 7 are bearish on the stock’s prospects. With a loss potential of nearly 3%, the stock’s consensus target price stands at $314.88.