As anyone who has invaded Russia during the wintertime can relate, history has a way of repeating itself. Tesla (TSLA) has had an amazing couple of months. Buying on a dip could have resulted in a purchase price of $35. It closed on Friday at $91.50. I will be the first to admit I didn't see this rise coming. In a previous article although I said it seemed to be a great car, I thought the company was overvalued. It became obvious to me from reading some of the comments (some of which ended up being removed by the site monitors) that this stock has a cult-like following and many people are very passionate about the car, the company, and the founder.
One of the comments however suggested I do some research and compare Tesla to a Canadian company -Ballard Power (BLDP). At this gentleman's suggestion I thought it would make for an interesting article. The developments between these two companies are remarkable. Let's compare the two and see if history will again repeat itself.
Tesla was founded by spaceman and Pay Pal co-founder Elon Musk in 2003. It went public in 2010, closing out its first day of trading at $19. Its first model the Roadster was based on a Lotus platform and was primarily to prove the technology and generate excitement for the current Model S. The top model S has a range somewhere in the neighborhood of 368-424 km and costs $70-100 thousand (not including tax rebates). In the first three months of the year 4750 cars were sold. Plans also are in the works to produce other models in the future. It also has an agreement to produce power packs for Toyota's Rav 4 model.
Furthermore, Tesla has plans for a recharging network for Model S owners in high traffic regions in the U.S.
The big announcement recently was better-than-expected first-quarter sales and a profitable quarter. That last statement varies depending on how you look at it. If you exclude pollution credits the company didn't really make a profit.
Dr. Geoffry Ballard founded Ballard Power in 1979. It went public in 1993. The company was at the forefront of exciting new industry-fuel cells. A fuel cell is a device to convert chemical energy from a fuel (hydrogen) into electricity. Not really that new as fuel cells were invented in 1838. Fuel cells have been used to provide power in everything from forklifts to the electrical components of the space shuttle.
The advantages are many:
More energy efficient than internal combustion engines
Quiet operation (about the same as a normal conversation)
Compact - less space than batteries
Lightweight-much lighter than batteries
Not affected by the cold as are batteries
Virtually 0 emissions at source - only emission at source is water
Long range in cars (400+km) and refill time of 5 min
How's that for a sales pitch? Now what if I said that Ballard Power has had over 1 billion dollars in investment by major automotive companies including 200 million by Ford (F). Would you invest? Would you be on the cutting edge of saving the planet and ushering in this "new" technology, maybe get rich while you are at it?
We happen to have the advantage of hindsight in this instance. Here's the stock chart.
Yes I'm sure there were a lot of people who made money on Ballard Power. I'm sure there were a lot who lost a lot too. Does that chart look familiar?
Ballard Power gave up on the dream of fuel cell cars. It sold its car fuel cell assets in 2007 to focus on fuel cells for other uses.
I am looking at Tesla and trying to compare them. Both stocks shot up like a rocket - to around the 100-dollar range. Tesla's is in the process of shooting up now. Is it time to short the stock? It takes a lot of courage and patience to short a stock and sometimes deep pockets too. How high Tesla will go is anybody's guess but I think it's very difficult to justify this stock price. Will history repeat itself? Will Tesla's fate mirror that of Ballard Power? Only time will answer that question. I think the Model S is probably a very good car- it looks great. But buying the stock feels too much like a visit to the casino.
Tesla's market cap is 10.57 billion right now. If I had 10 billion sitting in my bank account I'm pretty sure I could find something of more value to spend it on. Ford's market cap is 59.3 billion and its P/E is 10.2. If you bought 10.57 billion worth of Ford you would own 17.8% of the company. You would get $767,000 per day in dividends. Ford sold 5.67 million vehicles in 2012. Tesla has a goal to sell 20,000 this year.