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 company will likely survive and thrive 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 factors such as vehicles in transit, demand, and profitability, the company’s long-term view remains intact. Munster added that he believes patient TSLA investors will be rewarded in the future, as Tesla’s long-term strategy unravels.

“We believe 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, autonomy, and renewable energy. We continue to believe that over the long-term Tesla will prosper, and patient shareholders will be rewarded. The electrification of vehicles is undeniable, and Tesla’s participation in that EV future is crucial given its leading family of vehicles along with optionality around energy capture/storage products and autonomous driving,” Munster wrote.

Munster is not alone in his continued support for Tesla. The electric car maker’s shares dipped sharply following the Model Y event, with the company’s critics coming out in full force to express their skepticism for the vehicle and its effects on Tesla’s business. Despite these reservations, a number of analysts have remained firm in their positive outlook for the electric car maker.

Canaccord Genuity analyst Jed Dorsheimer maintained a Buy rating and a $450 price target 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 profitable sales, as the company works to bring costs down and then in 2021 introduce more mainstream price points to drive a further competitive lead over traditional internal-combustion-based vehicles.”

Baird analyst Ben Kallo, a longtime Tesla bull, also kept his Outperform rating and $465 price target for the company. Kallo argues that “sales of the Model Y should be supported by [a] growing market for premium/luxury crossovers and SUV. We estimate the U.S. market to be over 1.5 million vehicles annually, based on historical sales.” Daniel Ives of Wedbush further asserted his Outperform rating and $390 price target on Tesla, stating that “while some have argued that the production of Model Y could potentially cannibalize Model 3 deliveries, in our opinion this is a smart 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 currently weighed down by several potential factors, one of which is Elon Musk’s continued clashes with the SEC. The agency had requested that Musk be held in contempt of court over his tweet last February 19, when he noted that Tesla would produce “around 500,000 cars in 2019.” The SEC argued that Musk’s tweet violated the settlement that it reached with the CEO last year following 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 might prove to be a pleasant surprise. Elon Musk has noted that the first quarter would likely be unprofitable, though 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 company’s numbers. Coupled with a recently leaked message hinting that Tesla is urging its employees to help deliver vehicles until the end of the month, the electric car maker’s Q1 2019 performance might prove better than expected.

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