Tesla Motors Inc (NASDAQ: TSLA) has been a lightning rod of controversy from its beginning, to say the least, and discussion concerning its stock, TSLA, is no different. Those folks interested in the company, or more specifically the Tesla Roadster (or perhaps more generally electric cars) find themselves asking whether they should buy Tesla stock.
Is the stock a good value at this point and a great time to get in on the ground floor? Or, is Tesla grossly overrated and the stock destined to plunge into a free fall any moment?
Tesla's rather unlikely ascent and early success is rather well covered. Their iconic sports car, the Tesla Roadster, has been the poster child for all EV car enthusiasts and their history does not need repeating here. The company has only been around a short while, but it feels like it has weathered the initial storms that battered it since about 2006, though it is by no means in the clear yet.
The company issued its IPO in late June of 2010 to quite a bit of fanfare. The stock opened at $17 a share and quickly climbed to about $24 by the end of trading on the first day. Since that time the stock has fluctuated quite a bit reaching a peak of over $36 by late 2010 to a range of around $23-25 for most of 2011.
But what now?
There is clearly no consensus on the future of electric cars or Tesla Motors, not to mention the value of the stock. There have been countless articles written about Tesla Motors itself as well as it current head of state Elon Musk, and now more and more frequently where TSLA is heading.
The Motley Fool lays out both sides of the argument, wondering whether the company is a first mover of investment sinkhole, ultimately concluding that "investors might do better to avoid this potential game-changer for the time being."
In the last quarterly report, the company posted better than expected earnings, but unfortunately higher than expected losses as well.
The company is still very much in its infancy and its future is obviously uncertain; however, there have been some positive developments recently for the company, notably a very sizable partnership with Toyota as well as a clearly defined future with its upcoming Model S, and later, the SUV Model X.
Tesla's fate may largely be determined by factors outside of its control. The economy has obviously not been on its side, but the fact that it has more or less emerged intact from these last few bleak economic years may be a testament to its appeal and success.
Another unknown that controls Tesla's future is the price of oil in the next few years. The more it costs for a gallon of gas, the more appealing an alternative fuel vehicle becomes. Gas at anything consistently over $5 makes owning an EV sound like a good deal, although there are certainly more affordable options available than a Tesla Model S. However, if gas prices trickle down, or at least remain relatively stable, consumers are not likely to make the leap to a new, relatively unproven, technology.
In the end, the success of Tesla may depend on Elon Musk...and if history is any judge, it wouldn't be wise to bet against him. He has put an enormous amount of himself, both financially and personally, into Tesla. It's pretty clear that he is ultra committed to the company and is willing to go down with the ship, should it fail.
Bloomberg has recently run a fascinating episode of its "Risk Takers" series on Musk that should give proponents of Tesla cause for hope.
The next few years will obviously be key for the company, and the fate of Tesla's stock, at least in the short term, might become more clear once we see how well the market takes to the Model S. At that point, though, you may have already missed a great chance to buy the next Apple...
This is in no way a recommendation for TSLA or any other stock and is simply for information and entertainment purposes only. Please consult with a certified financial professional before investing.