Tesla Motors Inc (TSLA)’s Elon Musk Is Starting to Sound Like Netflix, Inc. (NFLX)’s Reed Hastings

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Tesla is certainly an expensive stock. Until it reports several quarters of profitability it will have no official trailing price-to-earnings ratio, at the same time, its price-to-book ratio is almost 40-times that of General Motors Company (NYSE:GM).

But just because a stock is expensive, doesn’t mean that it’s destined to drop. salesforce.com, inc. (NYSE:CRM) is run by Marc Benioff, a CEO arguably as flamboyant as Musk. Like Tesla, Salesforce has been one stock that has consistently attracted short sellers, and consistently burned them.

Compared to its established competitor Oracle Corporation (NASDAQ:ORCL), Salesforce’s trades at vastly inflated financial metrics. Its forward PE ratio near 70 is almost seven times greater than Oracle’s 11. Meanwhile, shares of Salesforce have rallied more than 200% in the last five years. Currently, about 10% of the company’s shares have been sold short.

Buy or sell Tesla?

When it comes to investing in Tesla, traders must decide if they believe the company is more like Salesforce or more like Netflix: a high flyer that has burned its detractors for years, or an expensive stock doomed to drop.

The article Tesla’s Elon Musk Is Starting to Sound Like Netflix’s Reed Hastings originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

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