Is Tesla Motors (NASDAQ: TSLA ) a buy right now? With the company set to report its first-ever profitable quarter, there are good reasons to think so. In this video, Fool contributor John Rosevear looks at three of those reasons -- and explains what anyone considering an investment in Tesla should keep in mind.
Isn't it too late to buy Tesla?
Near-faultless execution has led Tesla Motors to the brink of success, but the road ahead remains a hard one. Despite progress, a looming question remains: Will Tesla be able to fend off its big-name competitors? The Motley Fool answers this question and more in our most in-depth Tesla research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.
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Report this Comment On April 22, 2013, at 3:06 PM, bearsnsox wrote:
Although you point out some very broad observations on why someone would want to buy a share of TSLA, you do not get into valuations and whether they should buy it at $1 / share or $50/share.
Let me tell you why its way over valued and should be trading at what Ford is trading at or lower. Currently the market loves a stock company with huge expectations and crazy growth speculations, due to the slow moving blue chips with stock piles of money that they are not doing anything with.
The initial "wow" factor will wear off and people will not clamour to get a 100k car when they can have a 27k (base) Ford Fusion hybrid that gets close to 50 mpg. Yes the Tesla is considered "luxury" , but there are a number of luxury sedans out there that are hybrids as well that get a very good gas mileage rate. With established companies like Ford, Toyota, Honda...etc, delivering higher mpg cars every year, the Tesla looks less appealing to the general market and you ar left with an upper class market who wants to be all "electric".
Now if you buy a Tesla with thier 85 kwh battery, you can get 300 miles at roughly $10 (at current electricity rates, which are some of the lowest in decades). The equivalent 300 miles can be achieved with a Ford Fushion hybrid (given $4/gallon prices) at about $25. The $4 / gallon is a high number and it will decline to several factors, including competition from natural gas and alternative energies. Clean Energy (CLNE) is already building a vast infrastructure for natural gas fueling stations and that will continue to increase as well as electric cars becoming a big competitor, thus due to supply / demand we should see oil prices taking a downturn just like natural gas did when volumes spiked to record highs due to new shale gas gathering techniques.
Thus just looking at two simple aspects about demand and payback period, this hype will be short lived. Take a look at the competition to this absurdly expensive electric car; hybrid competitors are topping 50mpg, alternative energies like natural gas vehicles becoming more prevelant and future energies like hydrogen are being worked on. Then you have your upper class market that can afford to spend 100k, they are ficle and will want the next best thing, so you will have the first wave of orders then they will drop off faster than the delorean did.
Thus coming back to your short video, yes this is a great success story and they will most likely post small profits for the first several quarters, but after that who knows, all I know is that the price per earnings on TSLA at $50 / share is ridiculous and will never be sustained in this market.
Report this Comment On April 22, 2013, at 3:37 PM, TMFMarlowe wrote:
@bearsnsox: I totally agree and I have actually made the valuation point at length in other articles on Fool.com. There are two more videos that were filmed in this session that will make those points as well -- they'll be released in the next day or two. (They got broken up into bite-sized chunks for editorial reasons.) Stay tuned.
Thanks for reading (er, viewing).
John Rosevear
Report this Comment On April 22, 2013, at 4:02 PM, bearsnsox wrote:
looking forward to them, also forgot to mention the payback period
take the lexus ES hybrid, loaded at 50k, for in my opinion an equivalent luxury hybrid, at 40mpg and at $4 at the pump right now, you can get 300 miles at roughly $30, so everytime you charge the tesla and get 300 miles you save roughly $20 against lexus, so now to payback for that 100k (50k premium) tesla, say you fill up twice a month (thus saving $40 a month or $480 a year) you are looking at a 100 year payback .... so the only advantage is owning something that is original and something you can brag about to your other 1% of the population cohorts...or if you plan on living 100 years and servicing the car repeatedly ...
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