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Tesla probably won't be a $1 trillion company anytime soon, but its stock will surge: strategist

Brian Sozzi

Veteran tech analyst Gene Munster is still a young guy and no doubt in good shape after years of walking Apple (AAPL) retail stores to dig up proprietary research for clients.

But even Munster is unsure if the suddenly rip-roaring market cap of electric car maker Tesla (TSLA) will reach one big milestone afforded to other leaders in tech. That is the hallowed ground of the trillion dollar market cap tech company, which as of today is currently held by Microsoft (MSFT) ($1.3 trillion) and Apple ($1.2 trillion).

“Never say never, that is probably not [likely] — at least in my investment lifetime, I am 50 years old,” Munster remarked on Yahoo Finance’s The First Trade when asked if Tesla had a date with the trillion dollar market cap mark. “It looks like it’s easy based on what has happened with the stock the past six months but it will be an up and down road.”

To Munster’s point, things have looked surprisingly easy for Tesla over the past six months.

The company is now producing cars out of its new Shanghai-based facility after building out the site in under a year. Remarkable considering Tesla was making Model 3s out of a makeshift tent at its California HQ in 2018. Meanwhile, Tesla scored a surprising profit in the third quarter. It reported a record amount of deliveries for the fourth quarter in a pre-announcement to investors earlier this month.

Tesla China-made Model 3 vehicles at its gigafactory in Shanghai, east China. (Photo by Ding Ting/Xinhua via Getty) (Xinhua/Ding Ting via Getty Images)

And to top if off, Tesla’s controversial Cybertruck is now being viewed as a design win after initial ridicule by most in the auto industry and outside of it.

The collection of very public wins — and a somewhat tame Twitter feed for often outspoken CEO Elon Musk - has propelled Tesla’s market cap beyond $80 billion for the first time. Shares of Tesla have skyrocketed 44% over the past year.

While Munster isn’t sold on Tesla being worth a trillion dollars anytime soon (unlike a few others on Wall Street), he continues to be bullish on the stock.

“With the addition of China Gigafactory, which just started producing Model 3, along with the release of Model Y in the fall, we believe the company can grow deliveries by 28% in 2020 compared to the overall auto industry that will likely be flat,” Munster wrote in a new note to clients.

“I do think this story could move measurably higher, meaningfully higher — higher than other expectations. Tesla plays into two undeniable truths around autonomy and electrification. And right now they have a lead in that. That does not mean that this [stock] will be straight up and to the right to a trillion dollars,” said Munster. “I think it’s important to note this is a complex business, you are building expensive goods that are susceptible to macro risks and production questions — there is a lot of moving parts.”

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Watch The First Trade each day here at 9:00 a.m. ET. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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