Investors have a love/hate relationship with Tesla Motors (TSLA 12.06%) stock. The electric-car upstart, which went public in 2010, has made some investors a huge amount of money quickly, while it's lost newer investors -- at least on paper -- a decent chunk of change fairly rapidly.
Those who bought just two years ago have notched turbocharged gains of 343% as of March 30. Meanwhile, those who bought near the stock's peak in September have lost about 32% of their investment's value.
Data by YCharts.
Beyond the stock, however, few companies generate the polarizing feelings of love and hate as much as Tesla. Here are three reasons.
1. CEO Elon Musk is a controversial figure
The company's brilliant and brash CEO Elon Musk himself evokes polarizing feelings.
In most people's minds, Musk is extremely closely linked with Tesla. To many, in fact, Musk is Tesla. This makes sense since he's the company's co-founder and chief product architect. Additionally, his strong personality means he garners much attention. He's arrogant -- or worse, according to his detractors. Meanwhile, his adoring fans view him as ultra-passionate for "fighting the good fight" against both the powerful auto dealers association and against complacency in his attempts to save the environment.
Elon Musk, Tesla Factory, Fremont, California. Source: Maurizio Pesce via Wikimedia Commons.
Love him or hate him, it's safe to say that Musk has maneuvered his way around major obstacles as well as the Model S has maneuvered its way to the top of Consumer Reports' "Best Overall" vehicle list for the second year in a row. In several states, for instance, he's turned auto dealers' attempts at roadblocks for Tesla's direct-to-consumer sales model into mere speed bumps. Additionally, he convinced a reportedly hesitant Panasonic to come on board the massive lithium-ion battery "Gigafactory" project.
2. Disrupters, by their nature, will cause polarizing feelings
Tesla has shaken up the century-old traditional automobile manufacturing model, both in terms of vehicle power source and distribution method. This kind of disruption always brings a clash between the old guard and those aiming to usher in change.
Billions of dollars are at stake, as a plethora of businesses are built around the traditional model. Auto franchise dealers are completely dependent upon the third-party distribution system. The enormous oil industry is heavily dependent upon the existing power source model, as gasoline demand accounts for nearly half of total U.S. petroleum demand. Beyond these groups, however, the estimated $200 billion U.S. auto parts market, the $700 billion U.S. convenience store market, and others may have much to lose if EVs displace a significant portion of the gasoline-powered vehicles on the roads in this country. Then there's the even bigger global picture...
So it's not surprising that many have come out slinging mud at a company that they view as interfering with their piece of the pie.
3. Tesla's at the center of the hot-button debate over the environment
There are passionate folks on both sides of the divisive topic of the environment. One contingent believes that oil-derived products -- such as gasoline -- are choking both our environment and its inhabitants. This same group generally believes human activities, not just cyclical factors, are causing detrimental changes to our climate. Then there's the contingent that calls these beliefs hogwash. Musk has long proclaimed that the main reason he started Tesla was to help save the environment, so it's no surprise he's become the poster child of the former group and the whipping boy of the latter.
There's also the nearly as contentious "EV vs. fuel cell vehicle" debate. Fuel cell vehicle proponents are just as passionate as their EV counterparts, and believe that FCVs should rule the roads of the future. A prime point of debate is which alternative-fuel vehicle is "cleaner." (While this is a worthy question to debate, from a purely investing standpoint the more pertinent question is "Which AF vehicle will most consumers prefer?" I believe EVs are going to edge out FCVs largely for one reason: convenience.)
Wrap-up
Investors should ignore most of what's written about Tesla, as it's mostly a (giga-)load of noise. Other than the quarterly numbers, investors' main focus should be on the progress of the Gigafactory, which is key to Tesla's long-term growth. The company needs to be able to obtain an adequate number of batteries at a cost per battery that will enable it to profitably produce its mass market Model 3 sedan, slated to begin rolling off the assembly line in 2017.
