Tesla Motors Inc (NASDAQ:TSLA) short report from Citron Research.
As reluctant as we have become to comment on Tesla Motors Inc (NASDAQ:TSLA), how can any active market commentator not have an opinion on this darling of the stock market? As Chrysler prepares its $11 billion IPO with $1.6 billion in trailing net income, how can we not acknowledge that the street has shifted into placing Tesla stock inexorably into the public’s hands … at exactly the wrong time.
It was one year ago that Elon Musk now famously told Fox News that there was a “Tsunami of hurt coming for those holding a short position.”
Tesla Motors’ stock price
At the time, the stock price was $30 a share, and shorts were betting the Model S would fail to gain widespread acceptance with the public, causing the company to crash and burn. The short thesis was based on the assumption that nothing could go right for the company. The shorts were wrong, and they paid for it.
Not only did things go right, they went better than anyone expected. Tesla Motors Inc (NASDAQ:TSLA) Model S became an instant automotive success story. Combined with a roaring bull market, the stock launched to stratospheric levels that were never anticipated by any auto analyst, or probably even the mighty Mr. Musk himself.
Telsa’s market cap
That is the past. The current market cap of Tesla Motors Inc (NASDAQ:TSLA) is over $22 billion, which forces us to ask the question:
“Are shareholders now making the same mistake that shorts were making one year ago?” — Andrew Left, Editor Citron Research
Tesla Motors Inc (NASDAQ:TSLA)’s stock is now priced as if nothing can or will ever go wrong, and execution will unfold without delay or misstep flawlessly over the next 5 years, as Tesla undergoes the inevitable transformation from a disruptive company selling to early adopters, into a global auto-manufacturing brand.
If you owned Tesla Motors Inc (NASDAQ:TSLA) stock at 30, you owned the future of the Model S, and you were rewarded with a trip to 60. If you bought at 60, you owned the future Model X, and you were rewarded with a trip to 90 and a well-supported secondary. But now, if you buy at 180, your basis is so high that you own the potential and the liabilities of Tesla’s Gen 3 — presumably its “Model E” – 3 or 4 years out in the future, which has significantly greater risks than previous models.