Tesla Motors Inc (TSLA) at $50, Where to Next?

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Building a company

In the end, Tesla Motors Inc (NASDAQ:TSLA)’s goal is to build a world class automaker that can eventually deliver profitable electric vehicles to the masses. CEO Elon Musk owns about a quarter of the outstanding stock and has a series of options that vest only if Tesla shares hit price targets well above current levels. As a long-term investment, we need to take a look at Tesla’s future potential.

Working out of the former NUMMI factory, which used to house a joint venture between GM and Toyota, Tesla’s factory has plenty of capacity as production is ramped up. When the factory was run by GM and Toyota it turned out hundreds of thousands of vehicles per year giving the factory plenty of potential for a start-up like Tesla. Even producing Model Ss at 20,000 per year, much of the factory still remains unused giving Tesla the ability to add the production line for its Model X SUV and the lower cost Gen III sedan. In Musk’s conversations concerning Texas’ dealer franchise laws, he offered the possibility of building a second assembly plant in Texas to assemble an electric pickup. But with plenty of space left at the Tesla Factory (as the company has named the former NUMMI facility), it will likely be much longer before the Tesla pickup comes into existence.

Production of the Model X has already been pushed back as the automaker focuses on Model S production, which is finding a buyer for every car it can produce. But as more models come online, the Tesla Motors Inc (NASDAQ:TSLA) name should begin to generate greater recognition and a more diverse product line should attract a larger customer base. All of this means greater sales that should lead to greater profits thereby providing earnings that can match the automaker’s valuation.

Breaking through $50

It took months and a major announcement about the company’s finances for Tesla stock to finally crack $40 per share. However, it has taken much less time for the stock to pass the $50 per share mark. Breaking this level shows that Tesla shares are not constrained to the $40 range and have the potential to quickly run higher should momentum continue or more positive news be released. While maintaining the $50 level is still up in the air, we will see over the next few weeks how significant the Tesla Motors Inc (NASDAQ:TSLA) announcements are as we watch for continuing execution in Model S production. Combined, these factors could determine whether the next stop is $40 or $60 per share.

The article Tesla at $50, Where to Next? originally appeared on Fool.com and is written by Alexander MacLennan.

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