Tesla Inc (TSLA)

*Short* These are great cars and Elon Musk is truly a visionary and innovator. The problem is a great car does not necessarily make a great investment. This is trading at extreme valuations. It has no EBITDA, no earnings, and no cash flow. They are going to need to raise another $2 billion this year to support their growth. Another knock is that they have recently tried to buy SolarCity (SCTY-Q), a related company which is also burning a lot of cash. He will want to cover this Short if 1) either valuations improve and they actually start meeting their targets, 2) the price momentum find a base and stabilize, and 3) a reasonable valuation.

This is not a car company; it is a technology company. It’s a wonderful product. The valuation is stretched, unless you think they are going to be able to scale the business up. That assumes that the competition is just going to sit there and do nothing. As a stock, this is highly overvalued.

(Market Call Minute.) Very expensive. Are they a car company or green energy company? Thinks investors are a little bit confused. Stock has suffered for the last little while, so this would not be a buy for him.

They have a challenge in making a change to how cars are powered. They are now going into the solar business which is always a money losing business.

(Market Call Minute.) This is not a value stock. They make no money and are actually burning through cash.

It is pricing big goals and objectives down the road. The most interesting thing with TSLA-Q is the purchase of a solar energy company. In 2012 it was the most shorted stock on Wall Street, but it turned out to do well. It is still 23% shorted now.

The auto industry is very scary for income players, because there is so much capital being put into it. The company is doing some great stuff that benefits the consumers and the environment, but she likes to see companies become profitable before she becomes interested.

Thinks they are going to have difficulty living up to their production targets they had set out. This is really a long term play on electric cars. Company is not profitable, and yet are looking at acquiring a non-profitable company. She would like to see more visibility as to when they are actually going to start making money.

(Market Call Minute.) The growth is going to be there, but even for him it is a little too rich for his stomach. Without the subsidies you are not making any money on the vehicles right now.

Took a bit of a hit by issuing some shares recently. Expensive and not a name that is going to end up in his portfolios. Trading at 145X forward earnings. Growth rate is forecast at around 70%, but he questions if that growth rate is susceptible to some risks.

(Market Call Minute) Too much risk even for him. It is not a business model that works.

It has been very popular. The concern is whether they can deliver all these orders. There is a question as to how you get them serviced. After sales service is a problem. It tried three or four times to go through resistance. Unless we can make new highs we are stuck within this broad range. Below $200 he would get out.

A high momentum, high growth stock. Just announced a new vehicle. It is at 200 times forward PE and an unknown growth rate going forward. There is a lot of risk to this name.

Trades at a crazy multiple. The issues the company faces are very simple. The car industry is a very capital intensive business. This company has constantly had to do share issues, etc. and dilute shareholders. Have a great product, but they need capacity and to build it out. That is the problem and the bottleneck for them. On valuation you are buying a very expensive stock with a lot of volatility. If you want to trade, you are better to buy it when it falls dramatically and sell it as it goes up.

They produce a great product. From a valuation standpoint in the market, it is extreme, extreme, extreme. For every car they produce, they have a market cap of $222,000. For comparison, General Motors’ (GM-N) market cap per car is $4300. He wouldn’t buy this.