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When Back to the Future II came out in 1989, I remember thinking how great it was going to be to own a flying car in 2015. More than 20 years have since passed, and sadly, we're no closer to that dream. (To say nothing of hoverboards.)
I've been even more depressed by the lack of growth we've seen in the electric vehicle arena. This hasn't stopped Tesla Motors (Nasdaq: TSLA ) though from rocketing to a new 52-week high, as its tie-up with Toyota (NYSE: TM ) resulted in an electric version of the RAV4. Despite a $50 million investment from Toyota and this partnership, I can't help but feel that Tesla is priced for perfection, and could be ready to redline.
A company's financials generally drive a stock higher. But Tesla's case, they send me scurrying for cover. Remember, Tesla is a very long way from turning a profit.
Revenue growth has hit a roadblock, and despite investments from Toyota and Panasonic (NYSE: PC ) , Tesla has already burnt through nearly $94 million this year in cash from operating losses and another $23 million in capital expenditures. Given its most recent quarterly report, Tesla's $96 million cash on hand leaves the company with less than one year of cash viability, almost guaranteeing the possibility of a secondary offering coming to market and diluting shareholders.
David & Goliath(s)
It's bad enough being the small kid on the block; it's even worse when your competition has a vast network of dealerships, more cash and advertising capability, and the ability to take a significant chunk of your monopoly away.
In my opinion, Tesla simply doesn't have the infrastructure to compete against Nissan, GM (NYSE: GM ) , or Ford (NYSE: F ) . Each of these companies appears ready to debut an electric vehicle either before or not long after, Tesla's $50,000 Model S sedan takes the stage.
I think the lesson here is that being the pioneer in your field doesn't necessarily create a successful outcome. Tesla still has plenty of time to prove itself and prove me wrong. But right now, people are essentially paying nearly $3 billion for the intellectual property rights of Tesla (which may ultimately prove more valuable than the cars themselves). Barring a major pullback, I don't see how Tesla will live up to expectations.