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Introducing The $1 Trillion TaaS Industry (And Why Tesla Could Dominate)

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Introducing The $1 Trillion TaaS Industry And Why Tesla Could Dominate

In an e-mail to clients on Monday, Global Equities Research analyst Trip Chowdhry explored Tesla Motors Inc (NASDAQ: TSLA)'s potential in the $1 trillion future TaaS (Transportation-as-a-Service) industry.

According to Chowdhry, Tesla, along with Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and Apple Inc. (NASDAQ: AAPL) are all developing "stealth projects" that are in some way redefining the transportation industry. The analyst suggested that the companies are working on autonomous driving, human-car interface, power systems, material sciences, related software, associated business models and ecosystems.

"This new industry will not be a zero-sum game anytime for the next 10 to 15 years," Chowdhry wrote. "Our research indicates that all these three –Tesla, Google and Apple will be successful in creating and owning a part of this probably $1 Trillion Transportation-as-a-Service market."

Related Link: Adam Jonas: Why Tesla Stock Is Worth $465

Chowdhry said we are nearing the end of the social networking and ecommerce boom in which some of the popular names operating in the group will certainly continue to exist, but at "depressed" valuations. As such, companies such as Alibaba Group Holding Ltd (NYSE: BABA), LinkedIn Corp (NYSE: LNKD), Twitter Inc (NYSE: TWTR), among others, will soon behaving like Yahoo! Inc. (NASDAQ: YHOO) – that is a "dead stock."

Chowdhry further singled out Tesla, noting that the company's fundamentals "remain strong" and the company should be labeled as a "multi-product company" given its many revenue streams. As such, it could sustain more than 50 percent year-over-year growth over the next 10 years, if not longer.

Chowdhry's comments echo those of Morgan Stanley's analyst Adam Jonas who commented that Tesla is likely to commercialize an app-based, on-demand mobility service as soon as 2018.

"We view this business opportunity as potentially additive to Tesla's existing model of selling human-driven cars to private owners and see potential for this model to conceivably more than triple the company's potential revenues by 2029," Jonas wrote. "That is, selling miles in addition to selling cars."

Chowdhry maintained an Outperform rating on Tesla with a $385 price target, which is based on a 5.4x multiple on fiscal 2016 revenue estimates of $9.11 billion.

Jonas maintained an Overweight rating on Tesla with a price target hiked all the way to $465 from a previous $280.

Latest Ratings for TSLA

DateFirmActionFromTo
Jan 2020MaintainsBuy
Jan 2020DowngradesEqual-WeightUnderweight
Jan 2020MaintainsBuy

View More Analyst Ratings for TSLA
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Posted-In: Autonomus Driving Global Equities Research Self Driving Cars TaaS Transportation As A ServiceAnalyst Color Top Stories Analyst Ratings Best of Benzinga

 

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