Both companies are also seeking to maximize their potential through new services. We have already discussed Amazon.com’s expanding grocery business and online streaming, but Netflix, Inc. (NASDAQ:NFLX) has begun to take on major cable providers’ network programming. With shows like House of Cards and Orange Is the New Black, Netflix, Inc. (NASDAQ:NFLX) is developing its own exclusive content, and customers (or potential customers) who want to see them will have to subscribe.
The thing all of these companies have in common is a combination of business-model innovation and technological changes. New initiatives, whether they be in online groceries, original programming, or increased auto production with new models, have convinced Wall Street that major growth is happening. Because of this, Wall Street is willing to generously price these companies for this amazing growth and maintain these valuations over time.
Wall Street dollars flock to growth, and Tesla Motors Inc (NASDAQ:TSLA), Amazon.com, Inc. (NASDAQ:AMZN), and Netflix, Inc. (NASDAQ:NFLX) are all expected to put out strong growth figures for at least the next few years. When one compares Tesla to companies with similar growth expectations (like the ones listed above), rather than mature automakers unlikely to see such growth in the next decade, Tesla’s valuation doesn’t look too far out of line.
Investors interested in Tesla — or any other high-growth company — as a long-term investment should do their own research and be warned that shares of these types of companies are not for the faint of heart. Wherever their shares are going, it’s sure to be a wild ride.
The article Does Tesla Need To Be “Fairly” Valued? originally appeared on Fool.com and is written by Alexander MacLennan.
Alexander MacLennan owns shares of Tesla Motors. This article is not an endorsement to buy or sell any security and does not constitute professional investment advice. Always do your own due diligence before buying or selling any security. The Motley Fool recommends Amazon.com and Tesla Motors. The Motley Fool owns shares of Amazon.com and Tesla Motors.
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