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I say who cares about the article. Tesla now has more than enough operating capital and the stock is now beyond being undermined by shorts and articles like this one. The factuals and counterfactuals can be argued ad nauseum, but the truth will only play out over the long term through every quarterly report. The best part of the article and the associated video was the "love the car, don't love the stock" (same as Cramer) - I hope every Wall Street fat cat reads that and decides he/she has to have the latest high-tech, but doesn't believe that high tech is worth the hype or the investment - Tesla doesn't need more investors.

The messaging narrative that Tesla needs to win going forward and building momentum to Gen III is not the investment narrative, but the consumer one - the more articles like this that affirm that "it's a great car, but an overvalued company," the better, because let's face it, the stock really could take a breather. And the basic debate as to wether the Gen III will meet cost expectations will be decided in the future by Tesla's design and price when it debuts, and by consumers, not this guy writing a mis-informed article three years out.
 
Thanks for posting. Hanging up was maybe not the best public relations move for Elon but I love his confidence. Obviously some errors here: they keep repeating $90k without mentioning $62k, it will be called the "Tesla Gen III" (hahaha), and not sure where they got the 140 mile Gen III range from.

Elon has literally no time for fools…his time is his most valuable resource and I am glad he does not waste it!
 
My 9 year old spent the night at her grandparents' house and saw Barrons on the coffee table. She did her best to read it, but she had some questions when I picked her up. We had a nice chat about how sometimes kids say mean things to the better, smarter, prettier kids to make themselves feel better, or because they don't know how to simply appload someone else's success. There may be a few other complexities here, but the underlaying motivations are spot on.
 
Barron's Track Record / Past Predictions / Recommendations:
JULY 14, 2008 -- Barron's Cover Story
Barron's Predicts A RETURN To RISING Housing Prices
After citing many empirical studies showing that housing would collapse, Barron's declared "...such pessimism appears overdone..." and that "...This real-estate rout has been more painful than prior ones, but it may be shorter-lived. Indeed, there are early signs of recovery..."
http://online.barrons.com/article/SB121581623724947273.html

2007: Barron's Wanted You To BUY The Following Stocks:
http://online.barrons.com/stockpicks-SC_BULL_O_2007_L
Blockbuster Video (buy at $4/share, now selling at 15 cents/share)
Citigroup (buy at $51/share, now selling at $13/share)

2007: Barron's Wanted You To SELL The Following Stocks:
http://online.barrons.com/stockpicks-SC_BEAR_P_2007_L#
SalesForce.com (THEN $10/share, NOW $40/share)
Amazon (THEN $84/share, NOW $277/share)
Under Armor (THEN $25/share, NOW $60/share)


Excellent work Barron's, excellent work.
 
Not to get conspiratorial about it, but it strikes me that poorly researched articles like these aren't interested in debating the long-term fundamentals of a company, but rather in winning the psychological argument of the day, and maintaining high volatility. And there are plenty of lemmings taken in by this and end up buying high and selling low when the fundamentals of the company or the market haven't changed. If the stock goes down 10, expect Barrons to come out with an article saying what a game-changing company Tesla is, and though I believe that to be closer to the truth, the article will be as poorly researched and this one.
 
I am not very sure about Barron's work, but one thing struck me that model 3 will have a short range to achieve lower price tag. I mean anything below 100 is not great idea in 3-5 years time but who knows what other companies will bring to that market.

I think after the MS 40 kwh decision to cancel, Tesla has a desire to never make a car that gets less than 200 miles of range.
If Tesla cannot make the Gen III with at least 200 miles of range, I think they will delay it until they can figure it out.

The goal will be for the Gen III to be able to utilize the Supercharger network. So the range of the Gen III needs to be able to get from SC to SC. They seem to be spacing the SC network about 100-150 miles apart. So a Gen III with a 200 mile range should be able to make it. I don't think Tesla will ever make a car that cannot utilize the SC network. So forget about 100 mile commuter versions of the Gen III.
 
While I disagree with a bunch of the content in that Barron's article, I will note that I am an avid Tesla fan and bought the stock at $26... but I am not a stockholder right now. For the next year or so, I expect this stock to show very high volatility: it could go down, it could go up, it could do anything. Markets can, and often do, get hysterical. At this point, I consider the movements of TSLA at least partially disconnected from the fundamentals, I consider the stock to be priced for perfection and world domination, and I am not interested in gambling. There is IMHO a decent probability of a significant pullback over the next 12 months as we work up to a Model X release, and I'd rather not take the risk. To quote Warren Buffet: "First rule of investing is, try not to lose money."

I hope to reinvest in TSLA again in the future. But I'll do so when the market movements for the stock are less volatile and when the expectations are not so high. I am aware that I could be missing out on another upswing, but that's fine... at this point my main interest in my money is preservation of capital and I think that goal is best served by not participating in TSLA right now.

Just wanted to point out that not all of the people who think the stock is overvalued think the company won't succeed. I am CERTAIN that Tesla will do well, and I have full faith in them. But TSLA at $105 is not within my comfort zone as an investor right now. :)
 
@Rodolfo - the problem with your investment strategy as that you may never get back into investing in Tesla and miss out on a huge opportunity. If the stock corrects then great, you will get back in and make a killing. If it doesn't correct, then it will keep going up and you will miss out.

If things go well for Tesla, then by 2017 you will have 50,000 - 100,000 Model S/X's sold per year at ASP of ~$90,000, and 100,000 - 200,000 Gen 3 with ASP of ~$50,000. That would set the Annual Sales at a range of $10bn - $20bn for auto sales alone. Established tech companies with comparable gross margins would trade at a 2x Sales Multiple. But since Tesla would be in a huge growth phase it is not unreasonable to see a 4x Sales Multiple if not higher.

Apply those multiples and you get a $20bn - $80bn market cap in the next three years. Therefore, Tesla's stock will be trading at about $200 - $700 range; most likely around $500 if things go as planned.

You could run the same numbers with a gross margin of 20% and apply other operating expenses, do a PE ratio and you will come up with similar numbers too. I just tried to keep it simple here.

Case is that you said, "I am CERTAIN that Tesla will do well, and I have full faith in them." In this case you should be buying at $100. If they do well then the stock will be worth $500 within 5 years.
 
sleepyhead, that's the exact reason I didn't sell at $93 after the stock hit $95 and dropped. I felt that it was high and would drop back down to the 70's or lower, but then I had to ask myself what price I would buy back in at. I decided that I believed in Tesla for the long haul, so I might as well stay in and sleep well at night. :)
 
@Rodolfo - the problem with your investment strategy as that you may never get back into investing in Tesla and miss out on a huge opportunity. If the stock corrects then great, you will get back in and make a killing. If it doesn't correct, then it will keep going up and you will miss out.

Not the only possible outcomes. What I said is that I try to avoid excessive volatility and significant downside risks, and that at this point in time I see both of those in TSLA. If and when perceived volatility decreases, and/or the perceived downside risks decrease, I'll reinvest... and that may be at $70 or $80, but it may also be at $140 or $160. I don't evaluate stocks only on their price or P/E, because I think that's dangerously oversimplified. Right now I'm not afraid of the company, I'm afraid of the market being nutty.

I will continuously reevaluate TSLA as a potential investment. And I'm perfectly OK with reinvesting at $150 if that price seems to match the fundamentals better at that time, which it doesn't right now. The flaw in your reasoning is that I never said I wouldn't buy in the future if it stayed at this price or climbed... I said that I won't buy as long as I think the market is pricing irrationally. I am certain that they'll do well as a company, but I am NOT certain, nor even confident, that buying (or holding) at $105 is a good strategy right this minute. It very well may be... it just exceeds the acceptable range of values on my volatil-o-meter. :)
 
The thing is that unless we have a recession and/or a big correction Tesla may not trade at a price that "matches the fundamentals" for many, many years to come. Look at Amazon over the past many years, look at Google post IPO. One decade later google is still trading at a 26x PE ratio.

Use the midpoint of my numbers above and you will get $15bn in sales, and $3bn in gross income. Even if you say $1bn in other operating expensed and $0.7bn in taxes (very conservative numbers on the cost side), you are looking at $1.3bn in Net Income. That is about $10/share.

Apply Google's 26x PE ratio and you have $260 stock price. Since it will be in a huge growth phase PE of 50 will be more reasonable at $500/share.

I don't understand people's definition of risk. The way I look at it is I bought a stock at $100 and it may be worth $500 in 3-5 years or it may be worth $50. I think there is more than a 50% chance it will go up to at least $300. That sounds like a great risk/reward ratio to me, i.e. very high risk, extremely high reward!

Once again, the only risk I see is a major recession hitting us. But in the near term the economy is going to do just fine. Once economic indicators start turning south is when you should start cutting your Tesla positions.
 
I think after the MS 40 kwh decision to cancel, Tesla has a desire to never make a car that gets less than 200 miles of range.
If Tesla cannot make the Gen III with at least 200 miles of range, I think they will delay it until they can figure it out.

The goal will be for the Gen III to be able to utilize the Supercharger network. So the range of the Gen III needs to be able to get from SC to SC. They seem to be spacing the SC network about 100-150 miles apart. So a Gen III with a 200 mile range should be able to make it. I don't think Tesla will ever make a car that cannot utilize the SC network. So forget about 100 mile commuter versions of the Gen III.

Gen III price is pretty important. If they market supercharger network and price around $50k, it is a mistake. I think tesla mention price of $35k for Gen III & with supercharger, network spread out pretty similar to existing gas station $35k price is not bad. Again if they can bring the cost down for Gen III anywhere close to $25k (take out few features and keep it as a basic model) it will be huge success, and everybody feels comfortable in buying.
 
Gen III price is pretty important. If they market supercharger network and price around $50k, it is a mistake. I think tesla mention price of $35k for Gen III & with supercharger, network spread out pretty similar to existing gas station $35k price is not bad. Again if they can bring the cost down for Gen III anywhere close to $25k (take out few features and keep it as a basic model) it will be huge success, and everybody feels comfortable in buying.

Gen 3's goal is to compete with BMW 3 series and sell around 200,000 units a year. A car starting at $25k may come later down the road to compete with Camry's/Civics of the world and sell in millions. But that is Gen 4 or possibly even later if Tesla builds a Truck. Tesla does not have the capacity to do this just yet; think 7 - 10 years down the road for that.

I was looking at a BMW 328, and a basic stripped down model with only some of the basice upgrades, such as leather, upgraded stereo, etc. and you are looking at $40-45k. A basic Tesla starting at $35k will give you a comparable car, only faster, better torque, more power, roomier inside the cabin and far more storage, better technology, quieter, and much, much cheaper TCO.

Think of Gen 3 as a BMW 3 series killer for the same price. That is Tesla's mid-term goal. This is not going to be a cheap commuter car for the masses, but rather a luxury compact/mid-size sedan affordable to 50 million people in the US.