Is Tesla Hope or Hype?

With shares of Tesla Motors (NASDAQ:TSLA) trading at around $35.95, is TSLA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Tesla Motors designs, develops, manufactures, and sells electric vehicles. There is much debate about what kind of power and mileage these cars can offer. Let’s take a look at the Model S as a sample.

The Model S gets up to 300 miles per charge. That’s more mileage than most people would have anticipated. Its top speed is 125 miles per hour. Considering most people never go above 85 miles per hour, that should be sufficient. The Model S can go 0 to 60 miles per hour in 5.6 seconds. Its battery can charge 50 percent in 30 minutes. These are all impressive numbers for an electric car. They’re impressive enough to pique a potential buyer’s interest – until that potential buyer sees the price tag.

The Model S begins at $52,400, and there is a $5,000 reservation payment. The biggest challenge for Tesla is cutting costs enough so it can lower the price tags on its vehicles. Otherwise, the consumer will never gain serious interest, especially a weak consumer as we’re seeing right now.

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All that said, sales have been increasing. For January and February, sales have increased over 300 percent year-over-year. That’s an outstanding number, but Tesla’s market share is still very small, and profits seem like a far-fetched fantasy.

The chart below compares fundamentals for Tesla, Toyota Motor Corporation (NYSE:TM), and General Motors Company (NYSE:GM). These three companies differ in size. Tesla has a market cap of $4.11 billion, Toyota has a market cap of $164.33 billion, and General Motors has a market cap of $39.13 billion.

TSLA

TM

GM

Trailing   P/E

N/A

16.81

9.81

Operating   Margin

-95.41%

4.82%

1.88%

ROE

-227.22%

7.94%

16.15%

Dividend   Yield

None

1.30%

None

Operating   Cash Flow

-$266.08 Million

$30.85 Billion

$10.60 Billion

Short   Position

64.20%

N/A

7.50%

Beta

0.42

0.73

1.69

 

Tesla’s basic fundamentals leave a lot to be desired. Let’s take a look at some more important numbers prior to forming an opinion on this stock.

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