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Is Tesla Overvalued?

The following video is from Tuesday's MarketFoolery podcast, in which host Chris Hill and analysts Jason Moser and Andy Cross discuss the top business and investing stories of the day.

Shares of Tesla (NASDAQ: TSLA  )  rose again on Tuesday. Morgan Stanley raised its price target from $47 to $103. Shares of the electric car maker have doubled in the past month. How much of Tesla's recent upswing is because of a short squeeze? In this installment of MarketFoolery, our analysts take stock in the future of 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.

The relevant video segment can be found between 9:09 and 14:57.

For the full video of today's MarketFoolery , click here .

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  • Report this Comment On May 15, 2013, at 3:34 PM, JackB125 wrote:

    I do not think that there is much dispute that Tesla's fundamentals do not justify its current stock price. Also, comparing Tesla to other auto companies shows us a stark mismatch in valuations. But, how big a role should those fundamentals and comparisons have in pricing this particular stock at this particular time?

    The Model S is Tesla's FIRST mass produced car and the famously independent Consumer Reports has judged it better than all the ICE vehicles that have had 100+ years of refinement. Also, recall that the Model S has received numerous other independent awards including Motor Trend's 2013 COTY Award. And, the MT COTY Award was with a unanimous vote -- the first in MT's 64 year history.

    Something is going on here and it's not just a better car. IMO, we are seeing a disruptive product & Tesla is at the very front of a nascent “creative-destruction” wave in the auto industry.

    Historically, established businesses are very rarely capable of making changes quick enough to respond effectively to these types of changes. There are several sound reasons for this...

    * The market is too small -- until it isn't.

    * Our customers don't want it -- until they do.

    * It would detract from our core business -- until that doesn't matter anymore.

    The net is that Tesla may not have any serious competitors for some time.

    With all this in mind, perhaps we are seeing an efficient market in action. Perhaps Tesla's current stock price is "correct". If so, then Tesla's fundamentals and comparisons to other auto manufacturers are really not the way to price Tesla's stock at this time.

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