Tesla Motors Inc (NASDAQ:TSLA) reported first-quarter earnings last week, blowing away expectations and sending shares soaring. Less than four months after I first invested in this electric-car company, my shares have doubled. I’m a long-term investor, but a surge like this might be cause for concern. Should I take the Steve Miller Band’s advice and “take the money and run”? Or should I listen to the Steve Miller Band and let Tesla shares “keep on a-rockin’ me, baby”? Let’s take a look.
Go on, take the money and run
Tesla Motors Inc (NASDAQ:TSLA) bears have plenty to chew on. Before this quarter, the start-up automaker had never reported a quarterly profit, and many saw Tesla Motors Inc (NASDAQ:TSLA) as little more than billionaire founder and CEO Elon Musk’s latest pet project. With the connections and finances to get his company started, naysayers believed that this company’s full-throttled idealism would soon have it sucking on financial fumes.
Even for those investors who believe in the future of the electric car, Tesla Motors Inc (NASDAQ:TSLA) is hardly a stable or safe investment. Toyota Motor Corporation (ADR) (NYSE:TM) made hybrid history with its Prius model and raked in $225.8 billion in revenue for fiscal 2012. That’s 546 times larger Â than Tesla Motors Inc (NASDAQ:TSLA)’s $413 million in sales.
There’s even speculation as to whether electric cars have already had their heyday. With fuel efficiency at all-time highs, who needs electric when gas goes further? In China, Ford Motor Company (NYSE:F)‘s 31 mpg Focus is the best-selling vehicle, and April sales up are up 41% compared with the same month last year.
Even if Americans hang on to their hemis, Ford Motor Company (NYSE:F)’s and General Motors Company (NYSE:GM)‘ new pickups pack more punch for less petroleum. General Motors Company (NYSE:GM)’s Chevy Silverado offers the most fuel-efficient V-8 engine to date, offering 23 mpg to would-be gas guzzlers.
Keep on a-rocking me, baby
But Tesla shares are up for a reason, and bulls are revving their investor engines louder than ever before.
If I thought Tesla was a direct competitor with the likes of Toyota Motor Corporation (ADR) (NYSE:TM) or Ford Motor Company (NYSE:F), I’d tuck my tail between my legs and cash out today. The Blue Oval and its Japanese counterpart may be less agile than Tesla, but monster trucks don’t need to aim when they crush ants beneath their wheels.
In reality, Toyota Motor Corporation (ADR) (NYSE:TM) is actually a Tesla investor itself, and the two companies have massive consumer credibility to gain from double-teaming the efficiency advantage. Tesla poured 66% of its 2012 sales straight into R&D, paving the way for partnership potential in the years to come.
This quarter specifically, investors were elated to see Tesla Motors Inc (NASDAQ:TSLA) turn a profit. At $15 million net profit, or $0.12 adjusted EPS, this growth stock is hardly a balanced book. Nevertheless, seeing green instead of red is always a plus for any serious growth stock. For me, I place more importance on the automakers’ seasonally adjusted 83% increase in sales than its positive net income. In the words of Field of Dreams‘ Shoeless Joe Jackson, “If you build it, they will come.”