Tesla Motors Inc (NASDAQ:TSLA) shares have approximately doubled in a month’s time. That’s not only amazing, but also worrisome for investors and analysts alike. Is this a bubble? And if so, how big will it get?
Smarter Investing contributor Barry Randall believes Tesla shareholders should “run for the hills.” While I personally tend to really like Tesla Motors Inc (NASDAQ:TSLA)’s chances at success (no, I don’t own any shares), Randall is much more critical of the company. But he does have a good point for those who are just in Tesla for the near-term because the company’s stock has just inflated too fast for comfort.
Tesla’s Stock Inflation Throws Analysts For A Loop
He points to a client note written by Morgan Stanley analyst Adam Jonas, who said they were reviewing their estimates for Tesla Motors Inc (NASDAQ:TSLA) and that “triangulating the fundamental valuation with the share price is more challenging than for other stocks.”
Randall’s take on what Jonas really met is a lot more fun, but basically, what Jonas means is that trying to coordinate the current price of Tesla shares with the company’s most basic valuation has been enough to make analysts’ heads spin. There’s been almost no reason for the stock to go so high so quickly. The positive earnings report definitely was worth a sharp increase, but maybe not one as dramatic as what we’ve seen.
Looking Down On Tesla Motors
Nonetheless, Randall doesn’t think much of Tesla Motors Inc (NASDAQ:TSLA) at all or its plan to build a mass market vehicle. He compares the Tesla’s Gen III to the Nissan Leaf, which he says is the market’s low-end electric vehicle. He doesn’t seem to think we need or could use another one.
And what he doesn’t mention is the dramatic difference in range that exists between the Nissan Leaf and Tesla’s current technology, which exists in the Model S. The Leaf is advertised on Nissan’s website as getting the driver 75 miles on a single charge. The Model S, on the other hand, can go between 232 and 301 miles on a single charge (depending on which Model S you’re talking about), according to Tesla’s website.
There’s a huge difference in technology there, which gives Tesla Motors Inc (NASDAQ:TSLA) a major advantage over other manufacturers that make electric vehicles. And the company’s move to expand its supercharger network is also great news for its long-term success.
It seems like in the near term however, that the stock has just gone up too far too fast. We’ll have to see how this all plays out over the next year or so to see whether the stock stays where it is or if it loses some of its oomph.