Tesla's valuation should not be benchmarked against traditional automakers, says top analyst

Tesla’s (NASDAQ:TSLA) valuation should not be benchmarked against traditional automakers, as it could be “misleading,” said top analyst Gene Munster.

“Using traditional autos as a benchmark for how to value Tesla is misleading,” said Munster, an analyst at Loop Ventures. CNBC, “Not misleading in the sense of trying to steer people in the wrong direction. I think it’s just the wrong lens.”

In fact, Tesla can be seen more of a technology company than an actual automotive company, even if it is talking about its own cars. As Munster later said in the interview, Teslas are essentially “computers on wheels” rather than automobiles. Tesla revolutionized the way vehicles are perceived, as their over-the-air software updates are one of many examples of how cars are more like an iPhone than a Ford Fusion.

Munster indicated that Tesla investors may not feel the pressure until a company like Apple gets into electric vehicles, simply because the company would be a more credible threat than Apple because of its software expertise.

“The real thing that should be keeping Tesla investors up at night isn’t about GM. What is it ultimately… Apple, if they really get into business… they’re companies, it’ll be tech companies.” who’s going to redefine it [sector]Munster continued.

Apple is rumored to have held several preliminary talks with other automakers such as Toyota to develop an electric vehicle. The company has yet to announce any official plans to release the EV, but speculation suggests that there have been some talks within Apple to develop the car. With Munster’s claim that Apple may enter the business in several years, it’s a credible idea that the company may be of concern to Tesla simply because of its software expertise. However, Tesla will have a leg up on its manufacturing prowess for several decades, which other analysts, such as Wedbush’s Dan Ives have said, “are an enormous position of strength.”

Tesla manufacturing prowess, stock split plans indicate ‘giant position of strength:’ Wedbush

Despite adopting the electrification model, some are even using Tesla’s business model as a template, with traditional automakers not able to catch up to Tesla due to the company’s new manufacturing advantages and software expertise. Volkswagen, among others, has been facing software issues since launching its EV, especially with the ID.3 in 2020.

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Tesla’s valuation should not be benchmarked against traditional automakers, says top analyst






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