Tesla Motors Inc (TSLA), SolarCity Corp (SCTY): Is The Musk-Factor Weighing Too Heavily Now?

Take General Motors Company (NYSE:GM)’ Chevy Volt, on the other hand. At less than half the cost of the Model S, the “green” demographic should be snapping up a car that can drive the average commute without using any gas, right? Especially with range-anxiety keeping competitors like Nissan’s Leaf from taking a large bite out of the market. Tesla Motors Inc (NASDAQ:TSLA), on the other hand, is selling nearly as many units (maybe more, based on recent numbers) as either of these “affordable” options, and at twice or even three times the money.

Make an amazing car, and people will buy it. Make an electric car, and nobody will buy it? So far, that appears to be the case, since the Model S is outselling it’s real competition from Audi, BMW, and Mercedes.

And as far as the valuation, let’s look back at Amazon.com, Inc. (NASDAQ:AMZN):  Experience tells me that companies that are “overvalued” by the market, tend to be the best performers, and as long as they perform, they maintain those high valuations. Amazon.com, Inc. (NASDAQ:AMZN) has carried a P/S ratio that historically has been close to where it is today, or even higher for sustained periods.  And while Amazon.com, Inc. (NASDAQ:AMZN) isn’t a comparable to either of these businesses, there is a very valuable parallel- disruption of a major industry.While Amazon.com, Inc. (NASDAQ:AMZN) is altering the retail experience, Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) are positioned to change the way we think about and buy cars and energy both.

Foolish Bottom line

The “Elon Musk” effect has surely impacted share prices for both of these companies. The combined exuberance, and probably some unrealistic correlation of the two companies’ future prospects based on Musks’ past success, and incredible business savvy and intellect, has driven investor dollars en mass into both companies. Honestly, it has for me, because Musk could very well be a once-in-a-generation leader.

All that’s left is the execution.

Well, that and the hope for an (unlikely) IPO for SpacEx…

The article The New Bubble: Elon Musk? originally appeared on Fool.com and is written by Jason Hall.

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