Why Tesla Motors Inc. Stock Is Racing Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of electric-car maker Tesla  (NASDAQ: TSLA  ) are revving as much as 4.3% higher today. The company issued a press release today announcing expansion of its Supercharger network in Europe.

So what: The expansion of the network enables free and convenient long-distance travel between the Netherlands, Germany, Switzerland, and Austria. There are now 80 Supercharger stations worldwide, of which 14 are in Europe (four of them in Germany).

Tesla anticipates that by the end of March 2014, over 50% of the German population will live within 320 kilometers of a Supercharger -- and that by the end of the year 100% will be covered. According to Tesla's website, the company plans to eventually allow battery swaps at its stations for a fully charged battery in less than half the time it would normally take to refill a gas tank.

Now what: Tesla currently relies on word of mouth to stoke demand; the company does not advertise its products. Recently Tesla announced that it saw 6,900 deliveries in the fourth quarter, well above the estimate of 6,000. With production accelerating, it's important that Tesla continues to build out the infrastructure that is vital to supporting the increase in demand.

CEO Elon Musk mentioned in the last conference call that some of the company's European customers have been waiting two to three years for delivery. The European market is a significant market for the company in the long term. When Tesla reports earnings next month, look for further updates regarding European deliveries and orders. As for the stock itself, Tesla looks a bit pricey at 115 times next year's earnings estimates, but those estimates are on the rise. Tesla's demand and production growth is strong, but the company is an interesting, speculative investment based on an expectation that future earnings will rise at a high enough clip to justify its current (and higher) share price.

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  • Report this Comment On January 22, 2014, at 10:14 AM, joeinslw wrote:

    To answer the writers question, "Why Tesla Motors Inc. Stock Is Racing Higher?"

    I think it's because Tesla loves to make all these people who short tsla stock......SICK !

  • Report this Comment On January 22, 2014, at 10:31 AM, joeinslw wrote:

    Another reason is interest, I went to a free test drive for the Tesla model S, and the crowd was unbelievable. I didn't expect this much demand, this much interest, and people who registered online for the free test drive got their chance.

    I wasn't sure what time I could be there so I didn't register.

    There was a waiting list in case some who registered, but didn't show up, everybody who signed up did, so I never got the chance to drive the Model S this time.

    All of this interest without any advertising, with the only people who came and registered received the email, or saw it on the Tesla website....... unbelievable.

    I don't see how Tesla can fail at this point, everyone who learns about the Model S goes GA--GA over it.

  • Report this Comment On January 22, 2014, at 12:47 PM, upsthendowns wrote:

    It think it's been rising because Tesla is surpassing all the skeptics and even the optimists expectations. It's been a bumpy road for a bit, but TSLA is coming up out of a valley and the bigger picture is coming clearer, basically that there is no solid metric by which to compare Tesla because it's not just a car company, it's and energy company, the only one of it's kind in history to offer free fuel for life for the vehicles it provides it's customers. That fuel will soon be net solar and all of a sudden, over the last 6 weeks, Tesla has lit up the back bone of the nationwide charging network in the US with some 26 stations allowing. This accomplishment is making Tesla's vision of free nationwide travel very real and I think people are finally getting it! What valuation should such an unprecedented company get? It's a fool's game because the market will decide, not silly valuations based on company value, in the end it's always decided by the market!

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Nickey Friedman

Nickey is a select freelancer for the Fool. She writes about food & beverage, dry bulk shipping, and whatever else floats her boat. After selling four successful restaurants, she turned in her knives for a pen and now puts her passion for food, hospitality, and transportation in writing. You can send email to her at

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