Is Tesla Motors (NASDAQ:TSLA) a short term wizard or giant in making?

Tesla Model S

Tesla Model S

Dividend pundits would not recommend Tesla Motors (NASDAQ:TSLA). The Electric car manufacturer has not paid any dividends in the last four years. Those who rely on Earnings as indicators would not suggest Tesla stock as a good buy. The Income Statement for 2014 shows negative Earnings (before interest and Tax) of $184 m, weaker than the negative $38 m for 2013. The good news is the company has nearly doubled R&D ($47m) expenses.

But, then….

The markets are good at springing surprises. Tesla stock has shown phenomenal growth. Suppose you had bought one Tesla stock in January 2010 for $23.83, you could have sold it for $210.90 on April 1, 2015. And, made a whopping 885% profit. Two year track record is impressive; between April 2013 and April 2014, the stock shot up from $53.99 to $207.89, nearly fourfold increase.
What makes this more appealing is the volumes; average, 47,43,000 shares/day during 2010-2015. It is interesting to see why the stock makes such waves.

Electric Positives:

To be attractive, a business must have future prospects; in terms of products or technology. Here is where, Tesla scores good points with its legal plug-in electric cars. Its flagship Model S sold 35,000 units in 2014. With actual sales of 4,700 units in Q1-2015. The nearest competitors, Leaf from Nissan (NASDAQ: NSANY) and BMW 13 (NASDAQ: BAMXY) recorded sales of 4,085 and 2,681 units.
Do the numbers look tiny beside giant sales of gas driven cars? That exactly is the twist. What with environmental concerns, carbon emissions and not withstanding lower gas prices from shale oil, sustainable transport can create a story in the future.
One thing to watch out; speculation that Tesla is a likely candidate for buy-out could have fueled the last week’s 11% jump in the stock’s price. But then EV is the future. And, Tesla looks a good idea from that angle.


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