Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Tesla Motors Inc (TSLA), SolarCity Corp (SCTY): What’s Next?

Tesla Motors IncThis is the season when we celebrate great financiers like Warren Buffett.

But you don’t invest in the past. You invest in the future.

Maybe we should be celebrating Elon Musk instead.

The Fool’s Jason Hall calls what is happening with Musk’s stock “a bubble,” and on an absolute valuation basis, he’s right. But if you got in on Google Inc (NASDAQ:GOOG) when it started, you’re more than happy now. If you got in on, Inc. (NASDAQ:AMZN) during the 1990s, you’re also whole.

Musk founded a “web platform for publishers” called Zip2 back in the 1990s, selling it to Compaq for $305 million at the height of the dot-com bubble, netting himself a reported $22 million. Then he launched a payment outfit called PayPal, selling it to eBay Inc (NASDAQ:EBA) for $1.5 billion in 2002 and netting himself another $160 million.

But he told VentureBeat he was broke in 2010, mainly because he kept plowing his money into new ventures.

Tesla Motors: The Numbers

Tesla Motors Inc (NASDAQ:TSLA) was blamed by Musk for his own troubles back in 2010, and it’s nothing if not audacious.

The idea of building a new car company from scratch has been around for generations, and the road is littered with those who tried and failed. This is also true in the area of electric cars, where such companies as Coda and Fiskar have tried, and failed, often spectacularly. It’s become a political issue, with The Motley Fool’s John Rosevear asking in April, “Has Obama’s Electric Car Revolution Failed?” Not Fiskar’s, not Coda’s, not even Musk’s. Obama’s.

What separates Tesla Motors Inc (NASDAQ:TSLA) from the rest is Musk’s insistence on an all-robotic assembly process, on high-end styling ahead of mass production, and its apparent profitability. The company nearly broke even in its most recent quarter, and now looks poised to go into the black ahead of schedule. It has been steadily reducing debt and is now cash flow positive.

The company sold more cars, over 4,700, within its price range during the first quarter than Mercedes, BMW or Audi, and is now planning to repay its government loans with a new offering of equity. Skepticism, and the company’s performance in the face of it, have led shareholders on a wild ride upward, now up to nearly $85, and Musk himself is putting another $100 million to work in it.

Tesla Motors Inc (NASDAQ:TSLA) is the first company to succeed in the electric car market, and it may be the last new entrant there. But it has a solid niche in the luxury end of the market and a functioning business model, which is ready to move into the higher-volume middle of the market. As battery technology continues to improve, Tesla Motors Inc (NASDAQ:TSLA)’s future looks bright.

SolarCity: The Momentum

SolarCity Corp (NASDAQ:SCTY) was co-founded by a Musk cousin, named Lyndon Rive, and works at the more-profitable end of the solar energy market, selling, financing, and installing solar panels.

There are many companies in this part of the market – SunRun and RealGoods Solar among them. But SolarCity Corp (NASDAQ:SCTY) was early to the game of solar leasing, and was quick to provide financing.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.