1-Star Stocks Poised to Plunge: Tesla Motors? (F, GM, HMC, TM, TSLA, TTM)

1-Star Stocks Poised to Plunge: Tesla Motors?

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electric vehicle maker Tesla Motors (Nasdaq: TSLA ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Tesla's business and see what CAPS investors are saying about the stock right now.

Tesla facts

Headquarters (Founded)	Palo Alto, Calif. (2003)
Market Cap	$2.4 billion
Industry	Auto manufacturing
Trailing-12-Month Revenue	$99.0 million
Management	Chairman/CEO Elon Musk CFO Deepak Ahuja
Trailing-12-Month Operating and Net Income Margin	(119.3%) and (128.4%)
Cash/Debt	$96.6 million / $57.4 million
Competitors	General Motors (NYSE: GM ) Ford (NYSE: F ) Toyota Motor (NYSE: TM )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 61% of the 557 members who have rated Tesla believe the stock will underperform the S&P 500 going forward. These bears include fellow Fool Rich Smith (TMFDitty), who is ranked in the top 1% of our community, and A6EIntruder.

Late last year, Rich kindly warned Fools about getting burned: "$100M cash, burning same at the rate of $150M a year ... and about to go even more cashflow-negative when it stops selling the only product it has, to begin getting its next product ready. Share dilution, anyone?"

Many Fools remain concerned with Tesla's whopping cash burn, questionable competitive position, and seemingly unsustainable valuation. Currently, Tesla trades at a massive price-to-sales (25.8) premium to U.S. auto giants GM (0.4) and Ford (0.5), as well as foreign players Toyota (0.6), Honda (NYSE: HMC ) (0.7), and Tata Motors (NYSE: TTM ) (0.6).

CAPS member A6EIntruder elaborates on the bear case:

Tesla makes a niche product that gets tongues wagging and eyeballs popping. It will continue to garner press, reviews about how its product lineup heralds the future, and lots of dishy coverage on CNBC and spreads in magazines liked Wired. I am not saying it will fail. The George Clooneys of the world will always be able to afford a very expensive statement of style and eco-values. On the other hand, the green car revolution cannot ride on the spaceframe of a two-seater that costs more than $80k. ... The Japanese Import Revolution was borne on fuel-efficient and practical cars like the Toyota Tercel and the Honda CVCC. They didn't cost a mint and lasted. Tesla doesn't fit this bill in any way, shape, or form.

What do you think about Tesla, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. GM is a Motley Fool Inside Value pick, and Ford is a selection of Stock Advisor. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Report this Comment On January 18, 2011, at 10:12 AM, kahakun wrote:

I understand that entering the 2011 will be most on the side of pessimism. TESLA is a company that has a specific strategy in terms of market gains and performance, and financial securities of the company I believe is not a matter of concern. TESLA has done an exceptional job for a company it's size and age. They have secured important relationships in the industry and above. Keep in mind that they are the best in their class of vehicles and they are going after a real market!
Report this Comment On January 18, 2011, at 11:12 AM, android71 wrote:

Dorky ev cars will not set the pace - Tesla's S model will. It is a luxury car with a difference, in that it seats 7 - that - coupled with incentives of up to $8k, and 10 year fuel savings of $10k+ - places this model in line with the cheaper hybrids. Ultimately Tesla will be building a range of cars on their S platform, the cash they burn to develop the correct manufacturing infrastructure will be a real threat to the Ford, Nissam and even Toyota models - in 5 years. I think the real question is when will the larger companies move to buy Tesla outright - and that is where it makes more sense to invest and go long.
Report this Comment On January 18, 2011, at 9:32 PM, tellurium2000 wrote:

The fool is this site. two weeks ago this site was claiming it made a mistake and everyone should buy just days before the lock-up on employee owned stock was about to be released. Now, it's saying to sell it. Lame.
Report this Comment On January 19, 2011, at 10:47 AM, STRDave wrote:

I am positioned long on Tesla and comment on many sites that make these basic claims about how Tesla has one product to sell. Has the Fool not seen that Tesla has its manufacturing facility the former NUMI plant as a paid-for asset and that it closed a ROI deal with Toyota using this asset? Oh and btw bought NUMI at a fraction of its original cost? Plus it should be noted that everything Tesla has said it will do and the schedules it has said it will hold to are being met. This is what makes me an investor and a happy one. L O N G means L O N G.
Report this Comment On January 21, 2011, at 5:50 AM, lumaca84 wrote:

In the article they emphatize the massive tesla P/S (25) but in my opinion Tesla is company that don't even know the own Revenue, it's all in progress. And if they'll deliver 20,000 unit of Model S at 57000$ the P/S became circa 2, and it's no so high. I'm long in tesla.
Report this Comment On January 24, 2011, at 10:00 PM, boringusername wrote:

It's not going to be about sales of Tesla brand cars (though it's silly to calculate P/S on the roadster which was more of technology POC than product) it's going to be about technology and component sales to all of the other manufacturers.

updated 2 days ago Sponsored by:
	DOW	12,454.83	-74.92	-0.60%
	S&P 500	1,317.82	-2.86	-0.22%
	NASD	2,837.53	-1.85	-0.07%

TM	$76.80		-0.40	-0.52%
Toyota Motor Corp…		CAPS Rating:

TSLA	$29.81		-0.51	-1.68%
Tesla Motors		CAPS Rating:

TTM	$23.84		+0.02	+0.08%
Tata Motors		CAPS Rating:

F	$10.60		+0.01	+0.09%
Ford		CAPS Rating:

My Watchlist

9

1-Star Stocks Poised to Plunge: Tesla Motors?

Comments from our Foolish Readers

Report this Comment On January 18, 2011, at 10:12 AM, kahakun wrote:

Report this Comment On January 18, 2011, at 11:12 AM, android71 wrote:

Report this Comment On January 18, 2011, at 9:32 PM, tellurium2000 wrote:

Report this Comment On January 19, 2011, at 10:47 AM, STRDave wrote:

Report this Comment On January 21, 2011, at 5:50 AM, lumaca84 wrote:

Report this Comment On January 24, 2011, at 10:00 PM, boringusername wrote:

Add your comment.

Compare Brokers

Report This Comment

Sending report...

Today's Market

Create My Watchlist

You don't seem to be following any stocks yet!

Most Popular Articles

Related Tickers

GM	$22.44		+0.40	+1.81%
General Motors Com…		CAPS Rating:

HMC	$31.92		-0.28	-0.87%
Honda Motor Co., L…		CAPS Rating: