Gene Munster: Telsa Still Holds Upside Potential, But Elon Musk Is Making Life Hard For Bulls

Once again, Tesla, Inc. TSLA CEO Elon Musk opened his mouth, and once again Tesla stock is down.

Tesla shares were down 6.5 percent Friday following Musk’s interview on the Joe Rogan Experience podcast Thursday night. 

Tesla bull and Loup Ventures analyst Gene Munster has been critical of Musk’s use of social media in the past, and he was also critical of Musk’s behavior during the Rogan interview — particularly his use of marijuana.

“Elon’s actions are making it harder and harder to support Tesla as a company,” Munster said in a Friday post. 

Tesla Takeaways

Here’s an overview of seven key factors Munster said Tesla investors should know about Musk and Tesla.

• If Tesla can sell at least 60,000 Model 3s per quarter at gross margins of at least 20 percent, Musk’s behavior will be irrelevant and the company, and presumably the stock, will be a huge success.
• Munster is still betting Tesla will succeed in the long-term, but Musk’s interview with Rogan will only make things more difficult on the 15-percent chance Tesla will need to raise more money in the future.
• Munster said he believes Tesla’s board is trying to rein in Musk’s erratic behavior, but being unconventional will likely always remain part of his PR strategy.
• Musk seems to genuinely want to prove his doubters wrong, but he refuses to delete Twitter, drop his accusations that cave diver Vernon Unsworth is a pedophile and stop using recreational drugs in public, all of which are emboldening his critics, Munster said.
• Regardless of whether or not recreational drug use is legal, there’s an unwritten rule that CEOs of public companies should not use drugs, Munster said. 
• Musk’s relaxed attitude throughout the interview implies third-quarter results will likely be in-line with company guidance, although Musk’s unpredictability means investors will likely remain skeptical until Tesla has at least two consecutive quarters of profitability on record.
• Regardless of the reason for Chief Accounting Officer Dave Morton’s departure, Munster said any C-level executive quitting is a negative for Tesla at this point in time.

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Photo by Brett Hershman.