Market Overview

What Rebuilding Puerto Rico's Grid Would Mean For Tesla And Its Investors

What Rebuilding Puerto Rico's Grid Would Mean For Tesla And Its Investors

As of last week, Tesla Inc (NASDAQ: TSLA) was reportedly behind more than five energy projects powering schools, community centers and a children’s hospital in Puerto Rico.

And with seven in 10 residents still without power and the government scrapping its $300 million contract with Whitefish Energy, Tesla may soon field a rise in demand.

The firm’s focus is undoubtedly good from a humanitarian standpoint, but investors may need convincing.

Distraction Or Opportunity?

The solar and battery projects have already hindered Tesla’s auto timeline, compounding delays from Model 3 production bottlenecks.

“Other needs are greater now,” Musk tweeted in October, noting medical infrastructure a top priority.

While an immediate setback to Tesla’s ostensibly core automotive business, the projects are seen to encourage long-term shareholders.

“I think investors generally think of the solar piece as a distraction, and it’s probably going to remain that way for the next probably one to two years,” Gene Munster, managing partner at Loup Ventures, told Benzinga. “But I think eventually the tide will slowly turn and they will see this as an incremental positive to the story.”

For PR’s Sake

Although not necessarily profitable, the projects in Puerto Rico are considered important building blocks and the territory, itself, “an ideal use case” for Tesla to demonstrate its solar and battery capabilities.

“The biggest opportunity that they [Tesla] have is around the grid,” Munster said. “I think it’s kind of one of those perceived side shows but actually core to what Tesla wants to do over the next decade.”

The territory’s lack of existing infrastructure, access to sunlight and proximity to the U.S. lend a suitable set of circumstances otherwise hard to come by.

“No community is going to want to just fully embrace this and be the starting point, so you have to find really an acute pain point — they are just begging for help to be the starting point,” Munster said.

In Puerto Rico, Tesla found a match.

Powering The Investment Thesis

Tesla intends to expand its presence on the island, and the odds of scoring a major contract are favorable. Considering Tesla the most capable company for the infrastructure project, having proven its abilities in comparable communities, Munster places more than a 50-percent probability on its seizure of a large-scale opportunity.

“It’s probably going to be some form of a hybrid where they don’t do the whole thing, they do partial parts to show they can get it done, but clearly Tesla is going to have a place in rebuilding Puerto Rico,” Munster said. “I think it’s going to be a bigger place than we see today. The scale of it over the next few months will become more positive for Tesla.”

Related Links:

Tesla’s Most Unexpected Solar Competitor: IKEA

Patent Applications Hint At Tesla’s Forthcoming Innovations

Latest Ratings for TSLA

Mar 2019Morgan StanleyMaintainsEqual-WeightEqual-Weight
Mar 2019BarclaysMaintainsUnderweightUnderweight
Feb 2019Canaccord GenuityUpgradesHoldBuy

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

Posted-In: Analyst Color Futures Commodities Politics Top Stories Exclusives Markets Analyst Ratings Best of Benzinga


Related Articles (TSLA)

View Comments and Join the Discussion!

Latest Ratings

DRIBank of AmericaReiterates130.0
PVACNorthland SecuritiesUpgrades0.0
NKEWells FargoMaintains80.0
DRIWells FargoMaintains120.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Trader Essentials
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Vetr Crowd Upgrades Twitter

Walmart's Crazy Christmas Plans