Tesla Motors Inc (NASDAQ:TSLA)
has been subject to a lot of press in recent years. The “naysayers” believe Tesla is the next Solyndra in the making, while Sarah Palin categorized the company as “losers”. The bulls believe the company is the next big thing and will revolutionize the entire industry, and will provide shareholders with incredible returns.
Equity research firm is predicting $200 a share
Tesla Motors Inc (NASDAQ:TSLA) is already a market leader with no other competitors, so the company is in a class all by themselves. Wall Street estimates are drastically underestimating not only the value of the brand, but demand for their products.
Longboard Equity Research came out with a presentation with a thesis that the stock will be trading at $100 per share within 18 months and $200 within five years. Longboard believes that the company will dominate the electric vehicle market with an 80% market share, while Wall Street analysts are underestimating the brand’s pure potential, coupled with management’s deep talent and commitment to building a global brand.
Competition? What competition
Despite selling cars that cost more than double the competition, Tesla Motors Inc (NASDAQ:TSLA)’s $69,000 base price is set to outsell General Motors Company (NYSE:GM)’ Chevy Volt with a base price of $39,900. Tesla holds a key advantage over competitors by offering an expanded battery warranty that covers virtually anything. With a projected 995 miles mileage car in the works, Tesla Motors Inc (NASDAQ:TSLA) is well positioned to dominate over its competitors.
General Motors Company (NYSE:GM) also seems to understand the future demand for electric market cars, and is producing what they claim to be a next generation electric car in South Korea in an attempt to end slumping sales for their Volt line and play catch up.
Tesla Motors Inc (NASDAQ:TSLA) is an example of a new, innovative, exciting company entering the market and creaming the competition which consists of old, boring, and tired companies, much like General Motors Company (NYSE:GM). Tesla’s original objective was never to take away market share from the big boys, but to release a far superior product.
Head to head comparison with Ford Motor Company (NYSE:F)’s Focus Electric
The Ford Motor Company (NYSE:F) Focus was recently crowned as the world’s best selling car. Their electric line, on the other hand, doesn’t stack up to the Tesla Model S. The Focus is lacking in interior luxury features such as power seats, parking assistance, Bluetooth, and A/C with climate control. Tesla also offers double the horsepower with 362 HP versus 143 HP for the Ford Motor Company (NYSE:F).
Ford Motor Company (NYSE:F)’s $30,000 electric car, C-Max Energi, was widely considered to be the only “non old school” car that can stack up to Tesla. But so far in 2013, the fight is a no challenge win for Tesla Motors Inc (NASDAQ:TSLA). In January, the C-Max Energi sold 338 units, while the Focus Electric sold 81 units. All this compared to an estimated 1,200-1,600 Tesla units sold during the same time period. The results clearly demonstrate that Tesla is winning the head to head battle against Ford Motor Company (NYSE:F) despite their cars having a much higher sales price.
My take
General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) hold an advantage by already having in place an established global presence and logistics network. General Motors and Ford Motor Company (NYSE:F) are both currently trading near 52-week highs and are heavily focused on dominating the soon to be most important market in the world, China.
Meanwhile, Tesla is heavily focused on dominating the electric vehicle segment. Suffice to say, the market is large enough for everyone to survive, and an investment in either General Motors and Ford Motor Company (NYSE:F) can also provide lucrative returns based on the successful turnaround in the auto industry and revamped product line.
A $200 stock price will bring Tesla’s valuation up from its current $6.15 billion to around $30 billion, making the automaker slightly smaller than GM’s market cap, which is hovering around $40 billion. It is difficult to give a company like Tesla a price estimate, given the fact that traditional metrics are not sufficient in evaluating the company’s potential. $200 a share can be realistic in five years and investors waiting on the sidelines for additional confirmation of the company’s potential will likely miss out on the party.
The article Will Tesla Grow 5-Fold in 5 Years? originally appeared on Fool.com is written by Jayson Derrick.
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