Every once in a while, an analyst says something worth listening to -- even on headline-chasing TV news like CNBC. Far too often, however, analysts say things that are downright bonkers. This time around, the silliness comes from RiskReversal's Dan Nathan. As we examine two opposing analysts expecting Tesla (TSLA 12.01%) stock to go in two different directions, we'll visit Nathan's defunct crystal ball.
Source: Tesla Motors.
Tesla stock headed to $200?
"I don't think you chase it right here," Nathan said on CNBC Wednesday in a discussion about the prospects for Tesla stock after the electric carmaker announced a solid quarter and lower guidance for Q4 due to a blip in production. To support his case, Nathan mentioned the fact that even Tesla CEO Elon Musk recently told CNBC that the stock is expensive.
Nathan failed to fill in investors as to the second part of Musk's comment that day: "If you care about the long term... I think the stock is a good price." Nathan also didn't mention that, at the time this comment was made, Tesla stock was trading near all-time highs at $286, about $46 higher than shares were trading when Nathan made this comment.
It's no surprise that Nathan left out the second part of Musk's comment, though. Nathan is a trader, one who seems particularly interested in the short term.
So, what's his short-term bet on Tesla? Looking out a whopping couple of weeks, he thinks Tesla stock will see $200, based on the stock price waning since its highs earlier this year. Tesla is trading near $241 at the time of this writing.
Tesla stock headed to $400?
Taking almost a completely opposite stand, Stifel Nicolaus analyst James Albertine is not only betting Tesla will head sharply in the opposite direction, but he's also taking a longer-term approach to speculation with a one-year price target.
Albertine maintained a buy rating on the stock and a $400 price target after Q3 results, citing management's confidence in an early schedule for the Model 3 and the Gigafactory. The Model 3 and Gigafactory, of course, are likely too far away for Nathan to give them any thought. (After hearing his two-week time horizon, I wonder if he even knows they are in the works?)
So... who is right? Nathan's short-term predictions should be completely ignored until someone can prove that investors making such speculative predictions can actually outperform the market over the long haul. Albertine at least cites some fundamental trends that are likely to have an impact on Tesla's intrinsic value, but there's still no need to put a figure on where Tesla stock will be in one year's time.
Foolish investors should be more willing to embrace a bit of uncertainty -- especially with a stock like Tesla. Tesla is an expensive stock measured by almost any valuation metric. This means that even Tesla's excellent execution and its big aspirations don't automatically make the stock a buy. On the other hand, companies with Giga-like visions, and the execution to give them credibility, don't come around every day.
While I won't be placing my bets on a price target for Tesla stock today, I'll at least call it a hold. Over the long, long haul, this is the sort of business I want in my portfolio.
