Despite missing quarterly results, Tesla Motors Inc (NASDAQ:TSLA)‘s stock has had a stellar performance in the past several years, mainly because Elon Musk managed to turn Tesla into an automotive industry disruptor. The company has taken the public by storm in the past week or so, in connection with the launch of its Model 3 vehicle, which is planned to be the cheapest at just $35,000 (excluding tax credits or incentives). If the delivery of the vehicle comes as planned, it will be Tesla’s first mass-produced electric vehicle and if the company manages to get the production and delivery to 500,000 vehicles a year by 2020, as it currently anticipates, it will convince the skeptics about the company’s potential and will establish Tesla Motors Inc (NASDAQ:TSLA) as an auto manufacturer, rather than a great technology company as it is perceived now by some investors.
Following the yesterday’s presentation of the car, Tesla Motors Inc (NASDAQ:TSLA) says more than 130,000 pre-orders have been put for the Model 3, which is expected by 2017. Now, the company is relying heavily on its Gigafactory that will be mass-producing batteries for the vehicles, which is currently under construction in Nevada in a partnership with Panasonic. In an yesterday intervention on CNBC, one of Tesla’s shareholders, Drew Cupps of Cupps Capital Management said that, despite the critique, Tesla has registered solid growth in the past and with the model 3, it will continue its growth for the years to come.
“[…] while people have certainly critiqued Tesla for being a quarterly, or for not hitting this number, or that number, when you take a step back, this is a company that has grown between 40% and 50% a year for, now, in their fourth year,” Cupps said.
The investor considers that the addition of the Model 3, as a new building block, will allow Tesla to grow further by 35% to 40% a year for the next five years.
“[…] So this is a truly extraordinary situation within the automotive landscape and execution doesn’t have to be perfect,” the investor added.
Cupps added that Tesla Motors Inc (NASDAQ:TSLA)’s Gigafactory is what makes the company different from other auto manufacturers. The factory shows that Tesla is thinking bigger and faster than the rest of the automotive industry, which is why the investor and his team are positive on the stock.
However, it’s important to point out that Cupps Capital trimmed its stake in Tesla by 61% during the fourth quarter and reported holding 17,591 shares in its 13F filing for the end of 2015. The fund initiated a stake in Tesla during the second quarter of 2010 and initially held some 105,360 shares of the company.
Head on to the next page, where we will discuss what some other investors think about Tesla and take a look at two other notable positions from Drew Cupps 13F portfolio.
Tesla’s current business model that involves selling its vehicles directly to consumers through its stores and online should not be construed as an obstacle for the company to reach its delivery targets, Cupps considers. The company “will work hard to level the playing field” and to be able to go directly to consumers in all US states (it currently can sell in around 20 states).
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Among the funds in our database, Tesla Motors Inc (NASDAQ:TSLA) doesn’t seem to enjoy a lot of support with just 29 funds holding some 2.70% of the company heading into 2016. The largest shareholder is Daniel Benton’s Andor Capital Management, which owns 1.0 million shares. Another investor that likes Tesla is Al Gore of Generation Investment Management, who invested his own money in the company. At the New York Times’ DealBook Conference last year, Al Gore praised Tesla’s Superwall and Gigafactory projects (see more details here). On the other hand, notorious short-seller Jim Chanos of Kynikos said that Tesla’s stock was overvalued and that the company faced serious problems with its scale, which would make it difficult for the company to transition towards an automotive company (see article).
Aside from Tesla Motors Inc (NASDAQ:TSLA), the fund holds several other popular names, including Amazon.com, Inc. (NASDAQ:AMZN), in which it reported ownership of 23,135 as of the end of 2015, down by 11% on the quarter. Amazon is another long-term investment of Cupps. In a Forbes article in 2014, Cupps was quoted as saying that Amazon.com, Inc. (NASDAQ:AMZN) was the “most-advantaged Internet retailer”. The investor added that the market was waiting for Amazon to slow the investment in its business and start turning to a profit. The online retailer last year surprised investors when it posted a profit of $0.19 per share for the second quarter, versus expectations of a $0.14 loss. This helped Amazon.com, Inc. (NASDAQ:AMZN)’s stock to become one of the most profitable last year.
However, Cupps’ largest position is in healthcare stock ABIOMED, Inc. (NASDAQ:ABMD). The fund disclosed holding 277,761 shares of the company engaged in production of temporary percutaneous mechanical circulatory support devices for heart failure patients. Cupps owns shares of ABIOMED, Inc. (NASDAQ:ABMD) since the third quarter of 2014 and has seen the stock surge nearly threefold.
Disclosure: none
