Tesla Motors Inc (TSLA): Don’t Miss The Ride
Tony Sagami: Tree huggers and auto enthusiasts agree: The auto world is about to change in a big, big way.
The surprise is that the revolution isn’t coming from one of the big three American automakers, nor from any of the established Japanese or European carmakers.
Instead, it’s coming from Tesla Motors Inc (NASDAQ:TSLA), the innovative high-performance electric-car maker.
The newest addition to its electric-vehicle lineup is the Tesla Model S. This all-electric plug-in car is a model I believe will completely disrupt the automobile industry and change the way that the world drives.
It could also help make investors in this Palo Alto, Calif.-based company a lot of money.
Tesla Motors went public in June 2010, initially priced at $17 a share. Those shares traded in the $20 to $40 trading range until about April of this year. But recently, the stock took off like a rocket and is currently trading at $84 and change.
As of yesterday’s close, shares are up about 342%
since TSLA opened for trading at $19 a share back in June 2010.
Those Who Know Cars … Love It!
The reason for the big move is twofold: euphoric reviews about the Tesla Model S and much better-than-expected revenues/profits.
The Model S was highly praised by Motor Trend magazine, which named the Model S as the 2013 Motor Trend Car of the Year.
The car was praised for its ability to travel more than 200 miles on a single charge, its ease in accelerating from zero to 60 in less than five seconds, and the $59,900 (before federal tax credits) price tag.
The reviews get even-better …
Consumer Reports raved about the Model S, calling it the “best car they’ve ever tested” and given it the highest rating they’ve ever given, 99 out of 100.
“We don’t get all excited about many vehicles, and with this car we really did,” said. Jake Fisher, head of auto testing for Consumer Reports.
If you don’t know much about the Tesla Model S, you can click on the image below to watch a free three-minute video from Consumer Reports. Watch it; I think you will be impressed.
Direct link: http://youtu.be/458TLFRkAlk
Sales, Profits on Fire!
Tesla just reported its first-quarter results, and they were just flat-out stunning.
- Revenues came in at $562 million, way above the $492 million that Wall Street was expecting.
- This was a whopping 1,800% increase from the same period a year ago. Read that number again, please: a 1,800% increase in revenues!
- Profits of 12 cents per share, shattering the consensus expectation of 4 cents.
- Additionally, this is the first profitable quarter ever for the company, so Tesla has officially gone from a speculative start-up to a very viable, profitable business.
- Gross profit margins increased from 8% in the fourth quarter of 2012 to 17% today.
- Tesla sold 4,900 vehicles in the first quarter, exceeding its own raised guidance for 4,750 vehicles, and raised its full-year sales guidance from 20,000 to 21,000.
- Tesla is rapidly improving its production process. The company reduced the hours needed to produce a car by 40% over the last 90 days.
That was a pretty impressive quarter, but the future looks even brighter.
The Tesla Model S is so aesthetically and mechanically attractive that there are currently 20,000 people around the world on a waiting list to buy it.
Given the new glowing reviews from Consumer Reports and Motor Trend, the waiting list is likely to get even longer. A lot, lot longer.
Perhaps the single-most-important metric to remember about Tesla is that its future is not demand-constrained, but production-constrained. As Tesla increases its productivity and benefits from economies of scale, its revenues and profits are going to explode.
Could we be looking at the Apple of the automotive world? After all, Tesla has …
An Apple-Like Sales Model
Tesla has a unique Apple-like sales model in that it owns/operates its own retail stores and thereby skips the middleman.
This direct-to-consumer sales model is proving to be very effective. The company has 34 stores worldwide with another 15 openings planned for later this year.
Half of those new 15 stores will be in Europe and Asia, including its first-ever store in China. (Hong Kong became the first Asia location where customers could drive the Model S on public roads, back in January.)
I expect the image-conscious Chinese millionaires will beat a path down to Tesla’s door to get their hands on the Model S.
Tesla has turned the corner and is now a disruptive innovator that is going to change the entire automotive industry and make its shareholders a bundle of money in the process.
I’m not suggesting that you rush out and buy Tesla stock tomorrow morning. As always, timing is everything so you should wait for Tesla’s stock to go on sale or wait for my buy signal.
In the spirit of full disclosure, I need to tell you that I recommended Tesla to my Asian Century subscribers when it was still in the $30s, so that makes me a little guilty of talking my book. It is not an active position at this time. But if I recommend it again, click here to find out how you can be among the first to know.
However, I am absolutely convinced that Tesla is going to be one of those stocks that people look back at in a few years and wish they would have jumped on board.
Uncommon Wisdom (UWD) is published by Weiss Research, Inc. and written by Sean Brodrick, Larry Edelson, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended inUWD, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in UWD are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Roberto McGrath, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Marty Sleva, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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