Tesla Inc’s TSLA story is evolving and the company’s stock could shoot up to $2,500 in three years, according to Loup Ventures co-founder Gene Munster.
What Happened: Munster talking to CNBC’s “Squawk Box” program on Monday said that the Elon Musk-led company was on an evolutionary course.
“Elon has recently said that 30% to 40% of the value of the car could be in insurance,” Munster explained. “What that means is that they can start offering their own insurance and improve margins. That’s high-margin revenue.”
In terms of potential challengers, Munster sees only Apple Inc AAPL potentially matching Tesla if the iPhone maker were to get into the same segment.
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“As a Tesla investor, that would be the one announcement that would cause me to step back and rethink things,” Munster said on a possible foray by Apple into autos.
Why It Matters: Should Tesla stock touch $2,500 in the coming three years, it would value the company over $2 trillion, taking into account 931.8 million shares outstanding.
The Palo Alto-based automaker’s existing market cap is worth $598 billion. Apple’s market capitalization is over $2.1 trillion, as of Monday’s closing.
Munster does not think legacy automakers such as Volkswagen AG VWAGY or General Motors Company GM pose a formidable challenge to Tesla as “really there’s no substance competition.”
In terms of where Tesla is headed, Munster gave an example, which he said could make him lose his credibility — “I believe this is actually on Tesla’s roadmap — a flying taxi.”
“I would not invest in Tesla based on that, but the concept that this company is going to continue to evolve and be a tech leader in the next decade, I’m on board with that,” said the analyst.
Price Action: Tesla shares closed nearly 7.1% higher at $641.76 on Monday and gained 1.17% in the after-hours session
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