Tesla shareholders will prosper, says veteran Wall St. analyst

Tesla shares (NASDAQ:TSLA) have seen a drop recently amidst last week’s reveal of the Model Y SUV and Elon Musk’s ongoing skirmish with the Securities and Exchange Commission (SEC). Despite these headwinds, Loup Ventures managing partner Gene Munster believes that the business will likely survive and flourish after it overcomes these recent challenges.

In a recent post, the 23-year finance veteran noted that while Tesla’s Q1 results and performance are still up in the air due to swing variables such as vehicles in transit, demand, and profitability, the firm ’s long-term view remains intact. Munster added that he considers patient TSLA investors will be rewarded in the future, as Tesla’s long-term strategy unravels.

“We consider Tesla will survive because we expect the company can continue to raise money based on their lead in undeniable long-term growth opportunities including EVs, freedom, and renewable energy.  We continue to believe that over the long-term Tesla will flourish, and patient shareholders will be rewarded. The electrification of vehicles is incontrovertible, and Tesla’s involvement in that EV future is crucial given its leading family of vehicles together with optionality around energy capture/storage products and autonomous driving,” Munster composed .

Munster is not alone in his continuing support for Tesla. The electric car maker’s shares dipped sharply after the Model Y occasion, with the firm ’s critics coming out in full force to express their skepticism for the automobile and its consequences on Tesla’s business. Despite these reservations, numerous analysts have remained firm in their positive outlook for the electric car maker.

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Canaccord Genuity analyst Jed Dorsheimer maintained a Buy rating and a $450 price goal for Tesla stock. Dorsheimer wrote that “we suspect the strategy with the Y will follow a similar trajectory to the 3, skimming the high end of the market with more lucrative sales, as the company works to bring prices down and then in 2021 introduce more mainstream price points to drive a further competitive lead over conventional internal-combustion-based vehicles. ”

Baird analyst Ben Kallo, a longtime Tesla bull, also maintained his Outperform rating and $465 price goal for the company. Kallo argues that “earnings of the Model Y should be supported by [a] growing marketplace for premium/luxury crossovers and SUV. We estimate the U.S. market to be over 1.5 million vehicles annually, according to historic sales. ” Daniel Ives of Wedbush further claimed his Outperform rating and $390 price target on Tesla, saying that “while some have argued that the production of Model Y could potentially cannibalize Model 3 deliveries, in our view this is a intelligent and strategic move by Musk & Co. as they aim to further their leadership position in the electric vehicle market by now going after the hot SUV crossover market. ”

Tesla shares are weighed down by several potential elements, among which is Elon Musk’s continued clashes with the SEC. The agency had asked that Musk be held in contempt of court over his tweet last February 19, when he noted that Tesla would create “around 500,000 cars in 2019. ” The SEC argued that Musk’s tweet violated the settlement that it reached with the CEO last year after the now-infamous “funding secured” fiasco. Musk’s legal team has fought back, alleging that the agency is over-reaching in its efforts against the CEO.

Despite concerns about the Model Y and Elon Musk’s SEC troubles, Tesla’s numbers in the first quarter may end up being a pleasant surprise. Elon Musk has noted that the first quarter would likely be unprofitable, although the mass deliveries of the Model 3 to Europe and China, as well as the push for the $35,000 Model 3 in the United States, might make a difference for the firm ’s numbers. Coupled with a recently leaked message hinting that Tesla is urging its employees to help deliver vehicles before the end of the month, the electric automobile maker’s Q1 2019 performance could prove better than expected.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any places within 72 hours.

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