Tesla Motors Inc (TSLA) Or SolarCity Corp (SCTY): Which Elon Musk Bet?

Tesla Motors Inc (TSLA) Or SolarCity Corp (SCTY): Which Elon Musk Bet?
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Both Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) have had incredible years on Wall Street. Elon Musk has made a name for himself as these companies’ valuations have soared this year. Shares of Tesla climbed 320%, while SolarCity shares rocketed up 373%.

So if you could pick only one of these Elon Musk stocks? Which should it me? Tom Taulli of InvestorPlace considers this interesting question.

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Arguments for Tesla

Of course Tesla Motors Inc (NASDAQ:TSLA) has been growing rapidly this year and is seen as being pretty cool. As Taulli says, it has “the cool factor.” The automaker has been cranking out the charging stations with SolarCity providing the panels for its solar chargers. Tesla has also been setting up its own shops, most of which are in malls, and selling its vehicles directly to consumers.

Tesla’s Model S is considered to be the supreme luxury car, and the automaker has developed powertrains used by other automakers, including its partner Toyota.

Tesla is Wedbush’s top pick for 2014

Of course Tesla is one of the most polarizing companies on Wall Street right now. Analysts are either one extreme or the other. Wedbush analyst Craig Irwin is bullish on Tesla Motors Inc (NASDAQ:TSLA), naming it as their top pick in the electric vehicles category under Industrial Growth Technology. Irwin has an Outperform rating and $205 per share price target. He has based his top ranking for the company on expected long-term success for the Generation III vehicle and also near term upside from the automaker’s launch in China, the Model X launch and the upcoming announcement of the Generation III design.

Mention of the Generation III vehicle is where bears give pause on Tesla. The vehicle doesn’t even exist yet, and if Tesla is successful with a less expensive mass market EV, then the automaker will really strike it big. However, there is a lot of risk here, especially since we don’t even have the first clue about the design of this vehicle.

Arguments for SolarCity

Taulli notes that both Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) are phenomenal companies with stock prices that defy all fundamental valuations. However, he likes SolarCity a bit better than Tesla because the business model is  more stable. Tesla’s business model depends on selling cars, while SolarCity signs 20-year leases with customers for tens of thousands of dollars, setting long-term recurring revenue streams rather than once-a-pop purchases like Tesla’s vehicles are, for the most part, although the company does offer lease financing as well.

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