Paul Mamphilly TeslaIn this months issue of Profits Unlimited Paul put in a buy recommendation for Tesla (TSLA) he’s stating ”Tesla’s stock will become more valuable than Google and Amazon combined” and goes on for six pages of his reasoning behind his statements. I thought he made a compelling argument for buying Tesla stock.
Any feedback on this ??
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Tesla’s a very low-margin manufacturer with significant challenges as it tries to grow — it has been able to finance growth largely because of (justifiable) adoration of their Model S and a cult of personality surrounding Elon Musk. That doesn’t mean they can’t succeed, of course, and they have an extraordinary commitment to revolutionary advances that more cautious companies will never be able to compete with… but it does mean the risk level is very high. If sentiment shifts for whatever reason, and Musk begins to be seen as fallible, the stock could fall 90% and still be comparably valued to automotive competitors like Ford or Volkswagen.
I wouldn’t bet against Tesla, and I hope they are able to ramp up to huge volume on the new Model 3, but I can’t convince myself to buy the stock with a $60 billion valuation.
From what I read the automotive side of Tesla is just a part of a far lager enterprise consisting of renewable energy grids like the one they installed in New Zealand, and the manufacturing of tiles that have solar areas built in. Oh well thanks for the insight
There’s more to Tesla than cars. They just started production on their solar roofing shingles and their battery technology is a work leading position.
I’ve read the full transcript, and bought into Tesla based on his suggestion. I think the auto business is over hyped, but I agree with PM that the company is not just a car maker, but also a battery make and a solar power company. The solar shingle business, if it took off, could gain a tremendous growth with new housing as well as retro fitting existing housing. Plus, although it’s not mentioned in his letter (and to me it is one of the bigger plus’s for the company) is that the Tesla ‘brand’ was created in just a few years, and the name is now equated with quality, exclusivity, cutting edge technology, green technology, and of course the genius CEO. Branding is important, and I believe Tesla is going to become a darling of the stock pickers for years to come. That’s my bet anyway.
I bought in when he first suggested it at about 345 but at that price I could only afforded 100 shares. It will be a long term hold for me. You have to admit that Tesla CEO Elon Musk latest pay deal is a class act. He will be paid nothing for the next 10 years and then will be paid only if the company market value hits 650 billion Tesla market cap is about 60 billion now. Sounds like a good investment for me
FYI: Mamphilly advised to sell Tesla a few weeks later. I lost $39/share (bought 344, sold 305), but it was a good call to sell. I feel like it could be a good long term hold, but it’s going through cash quickly, and i fear too many potential threats to its business. (too all over the place, too many electric car makers, high barrier to entry, potential dilution, and if the CEO were to be hit by a bus, the stock would lose 50% of its value in a day).