Go underground with the Boring Company

Have you ever heard of the tunnel economy? Morgan Stanley’s Adam Jonas thinks you should. The analyst researched the innovation potential of this area at the intersection of transport and infrastructure.

And if you’re looking to bet on this theme, the title to hold, according to Jonas, would be… You’re here (TSLA).

“Our work on the economics of tunnels has deepened our appreciation of Tesla’s potential role in building renewable transportation infrastructure across a range of modalities,” the 5-star analyst said. “As the world’s most valuable automaker and a key proponent of autonomous technology, we believe Tesla will have a leading role to play in the development of The Boring Company,” which is majority-owned by Elon Musk.

Jonas sees the company as potentially the “tunnel industry’s number one disrupter” to pave the way for an approximately $20 billion U.S. tunnel TAM by 2050. There are also “potential synergies” here with the other elements of the “Muskonomy”, – Tesla , SpaceX and Neuralink.

The Boring Company aims to develop underground infrastructure at 10 times the speed of conventional tunnel boring machines at 1/100th the cost. That is, instead of spending $1 billion per mile over 10 years, the company plans to do it at $10 million per mile in less than a year, and all privately funded. , to start.

Can this actually be done? Some TBM experts say no. “We’ve heard similar criticism from A&D and auto industry pundits about SpaceX and Tesla over the years,” Jonas noted.

The analyst sees the investment trajectory playing out similarly to self-driving cars, eVTOL and space. Little interest for investors initially, but as boredom becomes prevalent in more cities and more miles of tunnels open up to commercial use, the analyst expects until the investment community pricks up its ears – that’s around 2023 and 2024. Then the ‘red dot’ will come, when ‘the broader investment community can appreciate the theme and its relevance to existing companies and publicly traded news”.

Not surprisingly, Jonas is a Tesla bull, pricing the stock overweight (i.e. buy) with a price target of $1,300. If the figure is reached, investors are looking at a one-year upside of around 44%. (To see Jonas’ track record, Click here)

Overall, among the analyst community, the majority is on Tesla’s side. With 17 Buys, 7 Takes and 6 Sells, the electric vehicle giant has a Moderate Buy consensus rating. The forecast calls for 1-year gains of around 22%, given that the average price target sits at $1,105 and changes. (See Tesla stock forecast on TipRanks)

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Disclaimer: Opinions expressed in this article are solely those of the featured analyst. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Bonny J. Streater