The problem I have with TSLA is two fold.
1) The stock is grossly overvalued. They really have to increase revenues by an order of maginitude (10x) to justify the current share price.
2) Buffet once told dot com investors at a conference about car companies 100 years ago. He showed a slide (slides) of hundreds of car companies that existed 100 years ago. Today there are three. People back then got lucky to pick one of the big 3. But anyone that did the obvious and shorted the horse made money. OK, not really the Tesla situation. But I really think if electric cars take off that Toyota, And every other major car company will come out with cars better than what Tesla can. Even Porsche is coming out with a Hybrid. Anyway, maybe there is a lesson. If you really think electric cars are the future, short Cummins or some other engine manufacturer. If TSLA is really going to dominate electric cars like people think, short Ford, short Toyota, short everyone. If this is not obvious, maybe it is not going to end well for TSLA.
I don't mean to be a Debbie downer but I think people need to seriously think about the market TSLA is trying to create. And if the market matures, will they really be dominant?
FWIW: I actually have considered shorting TSLA after looking at the market cap, balance sheet and cash flow statement. I need to do some due diligence. What are the other major car makers doing in terms of electric cars? Clearly they spend some money on R&D regarding electric cars. Having a BSEE, I'll let everyone know that the drive train in an electric car is not complicated. There is really no moat in knowing how to do that. it's jsut a high voltage control system.
I agree with point 1, but I think there's a lot of potential for them to grow revenues. A few reasons I'm optimistic:
-They are supply capped, with every 2013 model S already spoken for. They claim a 21,000 production run of the model S in 2013, and are on track to meet that. For a nearly 100k car, that is just damn impressive to me. To put things in perspective, BMW only sold ~11,000 7 series in the U.S. for 2012.
-They are addressing the major drawbacks of EVs, namely range and charging time with their supercharger network.
-Most importantly: They have brand recognition and a desirable product. No, Tesla may not be a household name yet, but they're getting tons of attention from the press especially since the Car of the Year award.
-In terms of other car manufacturers and EVs, Toyota and Mercedes both partner with Tesla for their EV efforts:
http://reviews.cnet.com/8301-13746_7-57429595-48/toyota-unwraps-tesla-powered-rav4-ev/
http://money.cnn.com/2013/03/27/autos/mercedes-tesla-b-class-electric/index.html
So there's always that side of the business.
Now I'm not saying everything is roses at TSLA, I still consider it speculative at this point.
However, their potential was enough to convince me to pick up 200 shares @ $37, and I'm looking to add to that position now that they've reported a profitable quarter.