Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electric vehicle maker Tesla Motors (NAS: TSLA) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Tesla's business and see what CAPS investors are saying about the stock right now.
Palo Alto, Calif. (2003)
Co-Founder/Chairman/CEO Elon Musk
CFO Deepak Ahuja
Trailing-12-Month Return on Capital
$278.4 million / $226.0 million
Ford (NYS: F)
General Motors (NYS: GM)
Toyota (NYS: TM)
Sources: S&P Capital IQ and Motley Fool CAPS.
This past summer, 1technowizard tapped Tesla as an untimely opportunity:
Economic incentives can't overcome a bad business model. When someone develops a low cost, fast charging battery, the equation changes. Until then, Tesla is selling a dream as practical as a jet pack. At least for the next 5-10 years, hybrids will be the dominant game changing technology.
Currently, Tesla even trades at a particularly lofty price-to-sales ratio of 18.6. That represents a massive premium to other auto plays like GM (0.3), Ford (0.3), and Toyota (0.4).
CAPS member fabfabman elaborates on the bear case:
When I look at the company financials, I don't understand how they plan to make money. Like Solyndra, Tesla has been heavily subsidized with gov money. Like Solyndra, Tesla plans to generate positive margins by (a) lowering production costs as battery technology matures (b) economies of scale. Per Tesla's presentations, only by means of state and federal carbon credit sales to other car manufacturers, Tesla can generate positive margins on vehicle sales. This is for both the Roadster and the Model S. Ouch!
Tesla has some unique IP and supplies good technology to other car manufacturers (Toyota and others), which however do not justify its market cap.
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Interested in another easy way to track Tesla? Add it to your watchlist.
At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and GM. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.