|Written by GSCR Staff|
|Tuesday, 06 May 2014 08:47|
In yesterday’s Goldman Guide we delved into the current market dynamics of the “Haves”, which included the DOW 30, and the “Have Nots”, which include Twitter (NASDAQ – TWTR) and LinkedIn (NASDAQ – LNKD). We have occasionally commented on Tesla Motors, Inc. (NASDAQ – TSLA - $216.61) on Twitter and the Market Monitor over the past year or so as sort of a ‘tweener” stock that is more about potential then actual sales and market penetration. The question is where does TSLA go from here?
The figure below is the one year price history for TSLA. The stock skyrocketed over 350% from about this time last year to 52-week highs over $250 in early March. Since then the stock is down 14% to the current price level.
Tesla Motors, Inc. (NASDAQ – TSLA) 1-Year Price Chart
(Source – Yahoo Finance)
Remember our 12 New Tactics for Investment Success from last Monday’s Goldman Guide? The first part of our assessment had to do with valuation. TSLA forward 12-month P/E is estimated at 56, versus 19 for the Russell 2000 and 16 for the S&P 500. The 5-year PEG ratio of 3.45 is also not that stellar. Strike One. Tesla Motors also has large debt positions with almost $90 of debt per every $1 of equity, another bad sign. Strike two. Finally, Tesla Motors’s negative operating and profit margins are also not in favor in current market conditions. Strike three.
While we think the 0.1% growth in GDP in 1Q14 is more due to the miserable winter, and a blip on the radar, but we also would not expect the economy to grow any more than 2.5% per quarter the rest of the year. And the bottom line is Tesla still makes a luxury item. Orders could drop off if the economy does not pick up. We say take some profits here and/or set a bottom of $175 for TSLA.
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com