February 18, 2014 | In: Consumer Cyclical
The number of public companies that are extremely overvalued and hyped is huge, but, it’s very rare to see a public company that hasn’t sold anything yet (and may never will) with a stock that’s up 450% (yes, that’s 4.5 folds) in one year. That company is Tesla Motors (NASDAQ:TSLA).
In case you don’t know, Tesla Motors is a company that wants to sell, in 2015, electric cars that may or may not work, and may or may not sell to the public well. Let me explain…
When Tesla Motors was first coined as a concept, there was no real competitor, now nearly every car manufacturer has at least one electric car, and guess what, these cars are not selling well. I live in Canada and the Nissan leaf is available to the Canadian public, but I have yet to see one being driven here in Montreal (or at least parked) myself. It’s either that all these Nissan Leaf owners think of their cars as Maybachs and only want to drive them in “exclusive” areas, or it’s that the Nissan leaf isn’t selling very well.
Maybe Tesla will be more lucky in North America, and it’ll sell well, but considering it currently has a market cap of about 50% of that of General Motors’ (or Ford’s, for that matter), I’d say it’s a pretty hard task to meet those stockholders’ expectations.
Tesla is a very new car, and the car manufacturing realm is a very competitive one – only time will tell whether this crazy venture will work or not. I personally think that it won’t, unless, of course, the reviews came out great and every other person in North America bought a Tesla and threw his old car.
I guess we’ll have to wait and see, but if you’re buying those TSLA stocks as if you are on a shopping spree, then I suggest to cover yourself with some put options, just in case this mad adventure doesn’t work.
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