Tesla has reached a point where the company is already “much bigger” than its CEO, Elon Musk, according to Wall Street analyst Philippe Houchois. The Jefferies analyst pointed out that while Elon Musk remains the face of the electric car maker, the company itself has been proving its critics wrong by becoming profitable — a feat that was deemed next to impossible by skeptics.
“Tesla at this stage is much bigger than Musk. Of course, Musk gets a lot of attention. But Tesla has been able to be profitable, at a level of pricing and product that nobody expected to generate cash,” the Jefferies analyst said.
Houchois also expressed his support for the company’s decision to shift its entire sales strategy online. Together with the launch of the $35,000 Model 3, Tesla announced that it will be closing a significant number of its physical stores in favor of an online-only sales model. This allows the company to sell its electric cars in all states across the US, but it also will result in layoffs across its staff.
These changes have not been received kindly by Wall Street. Barclays analyst Brian Johnson mocked the company’s strategy, calling it an “un-iPhone” moment. The Jefferies analyst begs to differ. Explaining his point, Houchois noted that Tesla is actually ahead of the curve in terms of its vehicle sales strategy.
“Every carmaker dreams about the ability to sell cars online. They are implementing a number of developments that other carmakers are only just thinking about or dreaming about,” Houchois said.
The Jefferies analyst ultimately noted that in the long term, he hopes that Tesla can grow profitably and de-stress its balance sheet, enabling the company to grow further. If the electric car maker can accomplish this, Houchois believes that Tesla can reach a level where it can effectively be self-funded.
Tesla shares (NASDAQ:TSLA) fell almost 8% on Friday following the company’s announcement of its online-only sales model. On Monday, the company’s stock continued its dip, dropping as much as 3%. Despite these recent dips, JMP analyst Joseph Osha maintained his Outperform rating and his $406 price target for TSLA stock, implying a 40% upside from current levels.
As of writing, Tesla is down 3.39% at $284.80 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
