Steer Clear Of Tesla Stock?

August 7th, 2013 by Zachary Shahan

As anyone who follows Tesla knows, the company’s stock has shot through the freakin’ roof this year. Common comparisons have been to Apple (AAPL) and Amazon (AMZN). Tesla shares have risen approximately 400% since last year. Many are still saying the value of the stock is higher and that it’s still a buy. However, some are confident the stock has gone over (or even way over) what its true value is, and are advising that investors now steer clear of it.

Image Credit: Tesla

An article by Robert Weinstein of TheStreet, published on MSN Money, is titled, “Buy a Tesla, steer clear of the stock.” Weinstein seems to be a fan of Tesla and its vehicles, but he writes:

At $132 per share, there’s not much to like. The forward earnings multiple is over 100 (P/Es over 20 have historically underperformed the overall market); the Quick Ratio is 0.54 (over 1 is considered safe); and last quarter’s “profit” was a result of government paid corporate welfare.

Tesla doesn’t expect to make an operating profit next quarter — and the list continues for longer than the range of its high-capacity battery.

In other words, buy the car but leave the lemon of a stock for someone else. Otherwise, you may find your investment on the side of the road needing repairs.

Still, others are feeling bullish on the stock. Wall Street Pitt writes, “TSLA is up $104, or about 307 percent year-to-date, putting the electric carmaker’s stock into a prime position on Wall Street and making it a favorite pick among growth investors.” This was after an extended quote from CNBC’s “Options Action” compared Tesla’s stock rise to that of Amazon several years back.

The real issue, for those interested in investing in long-term growth companies, is if Tesla will indeed produce a mass-market EV in 2017 and if it will dominate or take a good share of that market. I think that second part is the most complicated factor. I’m confident Tesla will produce an awesome mass-market car that is half the price of the Model S. But it won’t be the only one doing so. All the big auto companies are now producing EVs, some more seriously than others. These cars are going to get better and better, and the prices are clearly coming down. The real questions are, “will Tesla’s cars be that much better than the rest forever?” and “will it build up such a strong brand name that it becomes a major automobile company?”

In the short- or medium-term, Tesla is reportedly going to show losses in coming quarters and for 2013 as a whole. So, I’d expect the stock to drop a bit in the coming year or so. Then, I assume it will either 1) go down in the long term if Tesla doesn’t turn out to be the rockstar many of us think it is or 2) rise again later as it becomes a major automobile maker in a new Electric Car era.

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Tags: Tesla, Tesla Model S, Tesla Motors stock, Tesla stock, TSLA

About the Author

Zachary Shahan spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.

John Arevalo

But, they DID show a profit for Q2. Surprise, surprise…
tmac1

One ring to rule them all..
Tesla will rule them all because they GET IT
1) make a beautiful car
2) make it faster than an ice
3) cut out car dealers
4) free fuel for life Tesla Superchargers
5) outstanding customer service
6) range over 200 miles
7) refueling now down to 20 minutes plans do decrease further
8) drive down cost with mass production
9) no traditional marketing they do word of mouth

I am sure there are others..
I wonder if they can keep the control of quality as they expand if so watch out!

Tom
RobS

There is no doubt the share price is speculatively overheated, somewhere around $100 would be a far better balance between current reality (which on its own would have the share price around $50) and the future upside if their business plan is successful. The current share price, in my opinion represents a share price that is reasonable if their plan over the next 5 years is executed without a hitch, the implication of that is that there may be a major correction if there are any hitches.
Yes the other guys are just starting to show some interest, however all of their offerings are technologically ~10 years behind Tesla. Yes they will improve, but so will Tesla and Tesla has amassed the people and the technology to continue those advances at least as fast or perhaps faster then any of the other guys.
- Anony Mousy
  
  Tesla motors technology is not really revolutionary compared to what you can find out there. Overpriced and overhyped but not revolutionary. Name one technology that they have. Price for price, the Spark EV is light years ahead of Tesla in the mass market.
  - ericpruss
    
    WHat the eff are you smoking and why aren’t you sharing?
  - RobS
    
    Consumer Reports who rated it higher than any vehicle they have ever tested, not just EV’s dissagrees with you. Motortrend’s COTY board who unanimously voted for it as car of the year (no other car has ever received unanimous nomination) also disagrees with you.
    Anony, I hope you forgive us if we take their opinions over yours, if not then I couldn’t care less because they know a hell of a lot more about a revolutionary vehicle then you do.
Marion Meads

” I’m confident Tesla will produce an awesome mass-market car that is
half the price of the Model S. But it won’t be the only one doing so.
All the big auto companies are now producing EVs, some more seriously than others. These cars are going to get better and better, and the prices are clearly coming down.”

My sentiments exactly Zachary! The prices have come down already, and some are now priced well below the median after subtracting the rebates, except for Tesla and iBMW 3. It would be a difficult struggle for the Tesla to compete with the mass market cars. I am surprised that we have no reaction from the Tesla fans.

Still my main car won’t be a pure EV. I will soon be in the market for Cadillac ELR, after my Volt lease expires, as the ELR make more sense to me than a Tesla Model S. If only Tesla has a good range extender I would take it in a heart beat. I often have to go to meet various clients all over, and Tesla will never give me the flexibility to go to all of them even with proper planning and scheduling.
- brink
  
  boo!!!!!!
  - Anony Mousy
    
    hooo!!!!!
- Bob_Wallace
  
  “It would be a difficult struggle for the Tesla to compete with the mass market cars.”
  
  I’m not sure why. Tesla is manufacturing in the Freemont Toyota NUMMI plant. They’re using state of the art technology and have a low labor input.
  
  I would guess that Tesla is able to attract some of the best people in the field due to their early success. And they have a CEO focused on EVs, not one drug reluctantly to them. If they don’t have a serious stumble then financing for expansion is going to be no problem.
  
  And they’ve got a killer brand name and reputation.
  - Anony Mousy
    
    What killer brand name? They are still way unproven. Way overhyped, way overpriced.
  - Anony Mousy
    
    IIRC, elon musk disgracefully got rid of their best people. The pay scale is very bad so i dont know if there are some brains left. After all, no part of their cars are truly revolutionary nor advanced tech.
    - eject
      
      This is simply not true. In terms of battery and drive train Tesla is showing everyone how it is done properly. They are not using of the self stuff and make it work somehow the battery pack and the motor are purpose built.
      
      Daimler and Toyota wouldn’t buy their drive train if they could just as easily come up with their own solution. Nissan did throw 15 bn$ at the problem and all they got is a eco box with a high price. There will be quite some money coming into Tesla once the Mercedes B class finally rolls out with a Tesla drive rain.
      
      And what about the Super Charger network. This in my opinion is the key factor. Who else is able to supply sensible charging options on the go. Elon said other manufacturers will be able to catch a ride on them if hey are willing to pay up front. I hope Daimler will. I really hope Daimler will get of its feet with this electric business anyway, else the region where I am from might turn into ghost towns.