Tags: Gene Munster | CNBC | Tesla | Stock | Amazon | Shares

Gene Munster to CNBC: Tesla Has Better Potential Than Amazon

Tesla, led by billionaire entrepreneur Elon Musk (Getty/Jerry Lampen)

By    |   Friday, 26 May 2017 02:23 PM

Investment guru Gene Munster advises savvy investors to snap up Tesla shares now because he feels the electric car maker has better potential for future growth than online retail giant Amazon.com.

This is high and lofty praise indeed, since Amazon shares are nearing the $1,000 milestone, a record high for the company, CNBC reported.

Amazon stock was near $993 at midday Friday. Tesla shares were at $322.

"Tesla is a controversial story," the co-founder and managing partner of Loup Ventures told CNBC. "People don't understand what this company's mission statement is," he said, comparing it to Amazon's early days when the Seattle company was "only" selling books.

"Most people think of [Tesla] as an electric car company, but their mission statement is to accelerate the globe's transformation to renewable energy, " he said. "When you start thinking about that you can see them grabbing market cap from energy companies which are some of the largest market-cap companies," said Munster.

The Palo Alto, Calif.-based company founded by billionaire Elon Musk plans to start making its first lower-priced, mass-market electric car this year.

Tesla also recently reported quarterly revenue that more than doubled and also trumped analysts' expectations, driven by record deliveries of its Model X sports utility vehicles and Model S sedans.

Tesla, led by billionaire entrepreneur Elon Musk, delivered 25,000 vehicles in the first quarter ended March 31, its highest since the carmaker went public in 2010, and a 69 percent increase from a year earlier, Reuters reported.

But not everyone is as optimistic about Tesla.

Bank of America Merrill Lynch recently cut its 12-month price forecast on Tesla shares in half, saying the electric car maker's "long-term viability" was endangered after last year’s takeover of SolarCity Corp.

Tesla’s stock will fall 46 percent to $165 a share by next year, according to forecasts by John Murphy, the lead U.S. auto analyst at BofA.

"We believe the SolarCity acquisition introduces material risks to the longer-term viability of TSLA, while the recent capital raise only serves to further dilute potential shareholder value," research analyst John Murphy said in a note to investors obtained by CNBC. He has an underperform rating on the stock.

For its part, Amazon's ventures far beyond online retail, from cloud computing to movie making, are raising questions among corporate strategy experts about its focus.

The Seattle-based company wowed Wall Street recently with a 23 percent jump in sales, pushing its shares to an all-time high. But there are concerns that if blockbuster growth stops, investors may come to regard the company more like a conglomerate stock - worth less than the sum of its pieces, Reuters reported.

"High growth covers a lot of sins," said Harry Kraemer, a partner at private equity firm Madison Dearborn Partners and a professor at Northwestern University's Kellogg School of Management.

"Picture yourself running the company where one minute we're talking about how we're going to operate air cargo, and the next minute we're going to talk about artificial intelligence," he said. "I don’t think it's sustainable."

(Newsmax wire services and Reuters and Bloomberg contributed to this report).

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Gene Munster predicts that Tesla has more potential for future growth than Amazon.
Gene Munster, CNBC, Tesla, Stock, Amazon, Shares
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2017-23-26
Friday, 26 May 2017 02:23 PM
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