Tesla Motors Inc (NASDAQ:TSLA)’s drubbing yesterday has raised some interesting questions regarding the stock. On the one hand you have those who believe the calamitous drop was a necessary correction, logical and true. On the other are the bulls who remain starry-eyed about the company and the stock’s future and believe the drop is nothing but the perfect opportunity to hop on the inevitable ride back up, at a discount.
One man from each camp clashed on CNBC tonight, James Albertine of Stifel Nicolaus, who took up the honor of Tesla Motors Inc (NASDAQ:TSLA) as their analyst champion, and Charles Sizemore of Sizemore Capital Management, whose analytical spear was aimed squarely at Tesla Motors Inc (NASDAQ:TSLA)’s pulsing electric heart. The defender had this to say.
“The demand side, there is no competition, and no competition coming for a luxury niche electric vehicle to compete on range with the Model S among other features. Second, on the supply side, Tesla’s led the way as it relates to front-end loading investments in its facility, the scalability of those investments, and the fact that it in-sources 75 to 80% of its production […],” Albertine said.
Upon taking up his spear, Sizemore first honored his opponent in true knightly fashion, praising Tesla Motors Inc (NASDAQ:TSLA)’s CEO Elon Musk and the company he’s built. However he believes there is a line when something no longer makes sense, and Tesla’s stock has crossed it, especially when you compare it to other premier automakers.
“Tesla’s trading for about 13 times sales right now. You look at the German automakers, they’re trading for less than 1. BMW’s at about .75 times sales, Daimler’s about .50. So just back of the envelope there, Tesla’s about 26 times more expensive than Daimler right now. And again, this is Daimler, this is the maker of the Mercedes-Benz here, this is a premier automaker,” Sizemore said.
As Sizemore added, even in a best-case scenario where nearly all of Tesla Motors Inc (NASDAQ:TSLA)’s ambitions are realized, much of that is seemingly priced into the stock already, at least for the rest of the decade. It should also be noted that the drop only set Tesla Motors Inc (NASDAQ:TSLA)’s stock back to its late August levels, so if one wasn’t interested then, there’s really no added need to be now, despite the perceived urgency that now is a golden opportunity to take the plunge.
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