Though many out on the Street are sidelined on Tesla Inc (NASDAQ:TSLA), Gene Munster- sharing insights from his new research-driven, venture capital firm Loup Ventures- is excited to make his first call on the electric car giant a positive one.
Prior to Munster’s transition to research-driven stock analysis, he had been unable to cover Tesla, as the company was just beyond his internet coverage universe. However, from the analyst’s perspective, “[…] I believe that Tesla is not a car company, but a consumer electronics company that thinks like an internet company. With a bedrock in AI and robotics, Tesla is one of the best positioned companies to transform our lives over the next 20 years. We think Tesla is on par with Amazon when it comes to a reckless pursuit to shape the future, which we believe will reward investors over the long run.”
Ahead of the giant’s fourth quarter results to be delivered this evening, Munster acknowledges that with shares trading 48% higher these recent few months, “[…now trading near an all-time high, it’s understandable why investors are nervous going into the print.” Yet, the analyst believes the Street should shift focus away from CEO Elon Musk’s Model 3 production commentary. “His comments may cause volatility in the stock short term, but they are irrelevant in the long run,” explains the analyst.
As such, Munster does not give too much sway to earnings in the grand scheme of Tesla’s purview. In fact, with regards to the impending financial results, from the analyst’s eyes, it is a “non-event,” and he believes to determine the giant’s worth based on the amount of Model 3 vehicles sold this year is a poor judgement call.
“What’s more important is that Tesla makes the best car in the world, amplified by AI and robotics. That focus will keep competitors in check, allowing the company to reach scale and ride the next tech mega wave as our lives are quickly transformed (over the next 20 years) into an electric, automated existence,” Munster contends.
Looking ahead, the analyst sees that in a world where by the time U.S. children born in 2020 grow to drive the roads, what it means to drive a traditional car will be a change of the game. Particularly as the giant makes a clever play into the field of Artificial Intelligence, hoping to be the first to market, as “The first to market will have a measurable advantage because road data equates to smarter AI and safer cars,” Munster continues to place his faith in Musk’s innovative company and its future robotic L4 compatible car. If Musk can utilize smart robotics to fix TSLA’s demand-outpacing-supply dilemmas, Munster believes that once Tesla achieves scale, its edge will be unbeatable.
TipRanks analytics indicate TSLA as a Hold. Out of 15 analysts polled by TipRanks in the last 3 months, 5 are bullish on Tesla stock, 6 remain sidelined, and 4 are bearish on the stock. With a loss potential of nearly 23%, the stock’s consensus target price stands at $214.55.