Former Analyst Says Tesla Could Be Next Amazon

Tesla Model X and Solar Roof


Former Piper Jaffray tech analyst known for his “mostly” accurate Apple predictions, Gene Munster, calls Tesla the next Amazon.

Venture capitalist Gene Munster is now working as a co-founder and managing partner at Loup Ventures. For some time, he was the “go-to” man when it came to spilling the beans on would-be Apple news.

In a recent interview on CNBC’s Squawk on the Street, Munster lauded Tesla over and above Amazon as his top pick. Tesla stock is sitting at record highs, at over $300 per share, which isn’t yet near the ~$1,000 that Amazon is approaching. However, share prices of over $300 for an automotive startup that has made practically a handful of cars, and almost no profit, is pretty impressive. Munster said:

Tesla Model 3

Tesla Model 3

“Tesla is a controversial story. People don’t understand what this company’s mission statement is.”

“Most people think of [Tesla] as an electric car company, but their mission statement is to accelerate the globe’s transformation to renewable energy. When you start thinking about that you can see them grabbing market cap from energy companies which are some of the largest market-cap companies.”

To put it in perspective, Exxon Mobil has a market cap over $345 billion, but its shares have dropped over 9 percent in the last year. Amazon’s cap is $475 billion, with shares rising a whopping 39 percent. But here’s the kicker … Tesla’s market cap is around $53 billion (surpassing Ford and General Motors), but its share price has climbed 43 percent over the past year. If Tesla could take stronger hold of the energy market, as Munster predicts, the results could be staggering.

Munster thinks that despite Tesla’s mission requiring an exorbitant amount of capital, the company has the potential to get where it needs to. Amazon, on the other hand, may eventually struggle to maintain market share. He explained:

“I think obviously somebody buying the stock at $1,000, they’re hoping it goes to $2,000 so I think the opportunity again is the market share in online, that’s an increase and it would put Amazon at $1 trillion in revenue if they get to that.”

According to Munster, Amazon is up against growing and successful competition, especially in the cloud space:

 “The specific reason is Azure from Microsoft is gaining share, and Google is making a big push within that … so that’s an area that Amazon had an early lead on but is not maintaining the same market share they had in retail.”

Conversely, he believes that Tesla will see less challenges, more opportunities, and less competition than Amazon. He shared:

“I’ll give you one quick example, this race for batteries. There’s a problem about just the elements of the copper and the nickel to build the batteries and they have procured some of that. If someone wants to build the batteries, they need financing to get there. I think the markets will give him that leverage to build this future.”

“I would, pun intended here, buckle up. This is going to be a bumpy but positive ride for Tesla in the years to come.”

Source: CNBC

Categories: Tesla

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6 Comments on "Former Analyst Says Tesla Could Be Next Amazon"

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Gene Munster is notoriously wrong with Apple predictions although the stock will most likely skyrocket once the latest iPhone comes out…

I personally think Apple is about as big as it’s going to get in that their only so many computers and clicky devices you can make. Granted Apple does have a lot of cool helpful products.

Tesla could at least get as big as Apple maybe even bigger if you where to add the Boring Company Tesla and Solar City and Spacex.

It is already just like Amazon.
The only minor difference is that Amazon cash flow was always positive and it finances expansion by itself, and Tesla finances expansion of losses by serial share sales. This minor difference is totally irrelevant.

“Tesla stock is sitting at record highs, at over $300 per share, which isn’t yet near the ~$1,000 that Amazon is approaching.”

Admittedly I’m not a “financial guy” so perhaps there is something I’m missing, but isn’t it entirely pointless to directly compare the price of two different stocks as if you were comparing, say, new car prices? What if one of the stocks was split and the other wasn’t — then it would be even more obvious that comparing market prices on stocks is ridiculous.

I’m also not impressed by such awkward writing as “an automotive startup that has made practically a handful of cars”.

“…but isn’t it entirely pointless to directly compare the price of two different stocks…”

That’s why he added market cap. But yes, to be more serious in valuating companies, he should have analyzed the total value and market share potential of the sectors the company is in. In case of Amazon: Retail, IT-Services, Streaming (including film/show productions) and a few more.

In case of Tesla: car and semi manufacturing, on demand mobility (persons and commodities), energy storage, energy distribution, solar installations and so on.

Or to make it easy and use Musks own valuation of Tesla (“could be the first trillion $ company”) – every (unsplitted) Tesla stock share will be worth 5000$ in that case.

There are major differences between Tesla and Amazon. Tesla is a technology company that does R&D and actually manufactures stuff. Jeff Bozo’s Amazon is merely a distributor of other companies’ products, with the exception of banned books, and Amazon’s employees are constantly treated like slaves.