When Morgan Stanley analyst Adam Jonas released his report saying Tesla Motors Inc (NASDAQ:TSLA) shares could go to $320 in the next 12 months, some thought he was crazy. But now, The Street contributor Jason Schwarz suggests an even more bullish value for Tesla – $1,000 a share.
Tesla’s market cap nowhere near Facebook’s, Google’s
He believes Tesla Motors Inc (NASDAQ:TSLA) deserves a market capitalization which is closer to that of Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG). This is because both of those companies are basically advertising companies, and the advertising industry is a fixed amount that doesn’t change much from year to year. However, as many have already noted, the opportunities Tesla Motors Inc (NASDAQ:TSLA) will have after the gigafactory is built are nearly endless. Schwarz suggests that in the next three to five years, Tesla will hit $1,000 a share. And even at $1,000 a share, Tesla’s market cap would still be smaller than Facebook’s.
So where could Tesla Motors Inc (NASDAQ:TSLA) go after the gigafactory is built? It could even start making batteries for Apple Inc. (NASDAQ:AAPL), which CEO Elon Musk met with last year, possibly to talk about a partnership. Tesla’s battery technology could be used to power just about everything one day, so the company could be far more than a car company one day.
Tesla battles auto dealers
But even as Tesla Motors Inc (NASDAQ:TSLA) looks ahead to the possibilities opened up by making batteries, it’s probably still looking for ways to expand demand for its vehicles. One of the ways would be to set up more showrooms, but unfortunately, auto dealers in some states have such a stranglehold on them that Tesla hasn’t been able to make inroads there.
While some speculate that Nevada may be the ultimate winner of Tesla Motors Inc (NASDAQ:TSLA)’s gigafactory, CNBC suggests that Texas might actually come out on top. So why would Tesla choose Texas when it could save on transportation costs by choosing Nevada? It rather depends on which state offers the automaker more, not just in tax incentives, but also in strategic possibilities.
Tesla wants Texas
Texas has been one of Tesla Motor Inc (NASDAQ:TSLA)’s hardest nuts to crack. Auto dealers have been doing their best to push the company out because they fear the direct-to-consumer sales model. They pushed through a ban on direct sales through heavy lobbying, and there’s little reason to think that the ban would be lifted. But it might if Texas wanted to attract Tesla’s gigafactory.
Auto dealers are the largest sales tax generators in many counties in Texas, so they’ve got a lot of pull with lawmakers. But to turn down the 6,500 jobs Tesla Motors Inc (NASDAQ:TSLA)’s factory would create and the 4 billion to $5 billion investment would certainly make lawmakers look like fools. Of course Tesla does have to consider other things as well, like transportation costs, but if sales projections make it worthwhile to build further away from their Freemont, Calif. factory, then Texas may look pretty good.