DaveT, I'm not a short, I'm just making an observation. You're right the whole market is very frothy right now, Tesla isn't the only company with an extremely optimistic valuation. It's a great company and will likely grow to be a major player in the auto industry and at the right price levels, it's a great buy. It's just I've followed TSLA since the beginning, but I never dreamed the price would get this high. I thought it was going to correct around $160.
Actually my point was not that the market is frothy right now, but that any company growing at an incredible rapid revenue growth rate (ie., 100% annual rate) is going to get a very high valuation and this is just how investing works (as an investor you pay more for assets that are growing faster). Further, it's much easier to grow revenue from $1 million to $10 million, or even $100m to $1b. But it's much more difficult to grow revenue from $1b to $10b. And from $10b to $100b. There are very few companies that will grow from $1b in revenue to $10b in revenue in just 2-3 years. It's very rare. And for the companies that are able to grow at that rate, they will deservedly receive a very high multiple in their valuation.
It's very rare for a company to be growing as fast as TSLA with revenue in the billions (ie., $1b to $10b in revenue in 3 years) in a huge addressable market (ie., $1.5 trillion auto industry). This is the reason for the seemingly valuation and the reason why it could go a lot higher as well (especially as we get closer to Gen III which will eventually take TSLA from $10b to $100b+ in annual revenue).
- - - Updated - - -
But at 180+, you are betting that TSLA is going to perfectly execute on that promise and that there aren't going to be external economic events that disrupt the markets. But I think it could go to $200, but I think the end of the run is nearing.
Actually, I personally don't think the current stock price factors how fast Model S demand is/will grow over the next couple years (along with Model X demand that will likely surprise people). Most expect Tesla to sell 30k-35k Model S cars next year, and maybe 50-55k cars (Model S/X combined) or so the following year. But if TSLA can sell 40k Model S cars next year and 80k Model S/X cars in 2015, then this will drive the stock price A LOT higher.
On the flip side, if TSLA can't sell 30-35k cars next year (and 50-55k cars in 2015), then the stock will get hit very, very hard.
So when I hear people say that the current stock price is betting TSLA will execute perfectly, I think that's not accurate. The current stock price factors in a healthy demand of Model S cars (along with TSLA's ability to meet that demand) of maybe 35k cars in 2014 and 50-55k cars or so in 2015. So, if you think if demand is going to be significantly higher than that (and TSLA can meet that demand with production), then you really ought to be a long-term buyer of the stock at these levels.
The other factor apart from Model S demand is the pending Gen III vehicle. Again it's all about demand and TSLA's eventual ability to meet that demand. If demand is off-the-charts (which I expect), then this will drive the stock price up A LOT. And since the markets are usually forward-looking, people are/will be pricing in Gen III into the current stock price and rightfully so. If you think Gen III demand will be significantly higher than what most people think, then again you should be a long-term buyer of the stock at these levels.