Facebook Inc (FB), Yelp Inc (YELP), Tesla Motors Inc (TSLA): Three Hot Stocks Trading at Insane Valuations

Depending on who you ask, Tesla Motors Inc (NASDAQ:TSLA) is either worth $38 per share, or $200 per share. Analysts at Bank of America believe the former, while Dougherty & Co. argues the later.

Dougherty sees Tesla Motors Inc (NASDAQ:TSLA) as a revolutionary company, one capable of producing a mass-market electric car in the near future.

Conversely, Bank of America sees the stock’s current valuation as implying that the carmaker would sell over 300,00 cars in the year 2020. While that might seem like a long time, it’s not when it comes to cars — the Model S was in production for over four years.

Tesla Motors Inc (NASDAQ:TSLA) is only expected to sell about 21,000 of the Model S this year, and 300,000 cars is about the number of Honda’s Civic sold annually in the US.

Tesla’ current valuation may be the product of a short squeeze more so than anything else. Prior to the recent run-up, nearly half of Tesla Motors Inc (NASDAQ:TSLA)’s shares had been bet against. Today, it’s closer to about one-fifth.

Admittedly, that’s still pretty high, and Tesla shares could continue to run, particularly if the stock continues to post solid earnings.

Investing in high flying techs

Anyone who was smart enough to buy into these stocks a year ago should congratulate themselves on a great pick, but they ought to show some healthy concern about the companies’ valuations.

These are certainly not the sort of stocks Warren Buffett would buy.

While these stocks may have further upside, especially Yelp Inc (NYSE:YELP) and Tesla Motors Inc (NASDAQ:TSLA) given their short interest, their valuations make them susceptible to large, sudden falls in share price.

No one ever got hurt taking a profit.

The article 3 Hot Stocks Trading at Insane Valuations originally appeared on Fool.com is written by Sam Mattera.

Sam Mattera owns Tesla Motors Put options. The Motley Fool recommends Facebook and Tesla Motors. The Motley Fool owns shares of Facebook and Tesla Motors. Sam is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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