Tesla Inc (TSLA)

*Short* (Top Pick Sep 2/16, Down 74.94%) He was forced out of it in the spring. They were overvalued and starting to roll over. 11 times book value. 5 times sales. There are no earnings. There are lots of people trying to short it now. It is a cult stock.

It loses money and there is no prospect in the near future. Its business is heavily subsidized by governments. He does not like that. There is a lot of work to be done before this market changes.

This is something where the Shorts have been wrong, at least in the short run, however, it’s a name that is very hard to Buy and recommend. It totally defies belief, and is a totally “story driven” stock. The idea that they are going to bring out 400,000-500,000 Model 3s, having no manufacturing problems, and be profitable all of a sudden, is hard to imagine.

An amazing company, and have accomplished so much, and have sold so little. Has a huge market cap of $55 billion and about $5 billion in debt. The issue for him is that Tesla does not have a monopoly on batteries, battery power or electric engines. All they do is design 3 cars that look cool.

He wouldn’t own this. The valuation is ridiculous. This is a story that has got a lot of benefit from people who have a lot of hope, and Elon Musk has not really delivered on anything. Also, he is a perpetual issuer of equity because the cash burn is so huge in this company. Having the electric car front and centre in the car industry takes a long time to come to fruition. If you really want to buy the stock, there will be lots of opportunities because the price will fall again.

One of those highflying type names which he doesn’t own and doesn’t see owning any time soon. Valuations are way out there in terms of what they are trading at. The growth rate is very, very strong, but multiples are way out there because earnings have picked up. There are better names out there on a risk/reward basis.

Not a company he owns or would own. It is highly speculative. In terms of the value of the company per car produced, it is $675,000 of market capitalization. For comparison, General Motors (GM-N) is $4000.

TSLA-Q vs. V-N vs. FB-Q. He likes both V-N & FB-Q. V-N is a major player when it comes to transactions. FB-Q would be his favourite tech company. They own the world. They are a very innovative company. They have made great acquisitions. TSLA-Q he goes back and forth on. He is a believer in electric vehicles, but does not think that much of TSLA-Q. Every study shows there will be a lot more electric cars on the road in the future.

A name that has done very well, more so recently. Valuation is something you need to look at, and the valuation really isn’t there. It is still rather expensive, because there are no earnings. You want to watch and focus on the fact that capital spending has been very heavy with this company on their investment spend with the model 3. Until they meet their mass critical number, it is going to cost the company some money. A name he has avoided.

Wouldn’t go near this at current levels. Way too much is priced in. The valuation is so high. He is skeptical as to when they assume Elon Musk’s other project, Solar City, that was suffering tremendously. Now it has been incubated through Tesla. 10 years from now there will be more electric cars on the road, this company will not be the only one.

He would recommend this. They are building a tremendous company. Have now invested $20 billion into he company, but are not earning a good return yet. Currently they have negative earnings, but if they invested another $20 billion in 5 years, that is actually pretty reasonable. He would take a chance that they are going to get 25% on their invested capital.

Shorting this? She does not Short, but also it is not a stock that she would add. This has an aura about it, it doesn’t need to make money and it keeps going up.

Trading at an extremely high valuation. Many of the other auto companies are looking into building electric cars, so there is a lot of competition. The stock is very expensive. He doesn’t like this one.

He would not be a buyer of this. People love the product, but you have to be extremely careful not to link the quality of the product with the quality of the stock. The price tag is just too high. You are paying $650,000 of market cap for every car produced. Putting that in context, with GM you are paying $4000.

Would you buy this now? Yes, but in the right size weighting, which might be 2.5%, or maybe as high as 3.5%. He had said that if it were to break above $280, he would get a little more interested. They are going to need to ramp up their supercharger network. They have 5000 now and have announced that they are going to get up to 10,000, and going to try to have 15,000 charging stations at destination locations. There is a lot of concern in the analysts’ community on the solar city amalgamation and the debt load.