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Depending on who you ask, Tesla (TSLA) Motors is either a revolutionary investment opportunity that is going to trade at many multiples higher than it's at today - or, it's an overpriced, overvalued speculative stock that's trading at an insane premium that it's not worth. The contributors on Seeking Alpha all seem to think that Tesla is overvalued and a great short opportunity. Yet again, I'm in the minority - taking a long stake in Tesla through calls last week.

Tesla stock has been running like a bat out of hell for the past year, up 523.3% over the past year alone. It's yielded 31.9% for investors over the last three months, catalyzed by the Model S's great reviews - with some contributors even calling it the "best car in the world" right now.


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Tesla is set to report earnings on November 5th. Many analysts are predicting earnings to be the catalyst to "rope in" the overvalued stock, as Tesla has recently broken technical trend lines (downward) and as the stock corrects from its highs set earlier this quarter. Tesla continues to grow in Europe, but not as quickly as some analysts like, as competition from electric vehicles in Germany has diluted Tesla's sales.

In other words, it seems like everyone in the world is short Tesla right now - and that there's no shortage of bear arguments to support them. As I write this, Tesla is painting lows of the day, trading around $165 and change ahead of its earnings next week.

Analysts are predicting $13 million in profit, roughly $0.11/share, on $535 million in revenue.

I'm long Tesla at $163 and am going to be holding my position through earnings, as there's a few catalysts I think can still drive the stock price higher to close our 2013.

We'll start with more European expansion. Tesla came out with a bullish prediction this morning about the German market. It was reported this morning, by Automotive News, that Elon Musk is hopeful to sell 10,000 vehicles in Germany by 2015 - expanding Tesla's international footprint:

Electric car maker Tesla Motors is aiming to sell around 10,000 cars a year in Germany by 2015 as it builds out its networks of charging stations, CEO Elon Musk told a German paper.

"I have confidence in the German consumer," Musk was quoted as saying in an interview with Welt am Sonntag.

"Our fast charging stations should cover around half of Germany by the end of March 2014 and the entire country by the end of 2014," he said, adding he expected there to be 25 Tesla dealerships in Germany by the end of next year.

Tesla's high performance, all-electric Model S went on sale in Europe in August, and even overtook Volkswagen's Golf as the bestselling car in Norway in September.

International expansion remains, in a SWOT analysis of Tesla, a major opportunity and challenge. It's crucial that Tesla executes it correctly, and on the heels of mired sales elsewhere in Europe, this was a nice prediction to see.

But, again, the bears have a case - the stock, from a technical and fundamental level, is trading at a super-high valuation - with a forward P/E of about 120 that commands future growth of roughly 50% each year. That's something that would normally be a red flag for me, as I'm known to invest on fundamentals first.

However, a company like Netflix (NFLX) - or LinkedIn (LNKD) is a perfect example of why the stock market just simply throws out the book valuation on companies sometimes. People that tried to short these two companies based on their "speculative valuations" this year had their heads stomped in. The market, sometimes, has no rhyme or reason to it. If Mr. Market wants Tesla to move up, it's going to move up; regardless of the valuation this early in the company's life.

Another contributor, Green Energy Investor, states that Tesla's firm grasp as to its sales and numbers internally gives their guidance major credibility. He/she states:

Tesla isn't like General Motors or Ford that guess about the future. Every car Tesla makes currently is already sold before production even begins. This means any forecasts it makes about the future are purely its internal analysis on production and costs. Its CEO Elon Musk stated in the conference call:

And, it's important to note that we have visibility into these numbers more than ahead of time. So, the things that affect the gross margin, in order for them to, the fourth quarter really needs to be in place, we are essentially in place about a month before the fourth quarter, otherwise the parts that go into the car will not contain the [cost savings] that are necessary.

Unless he's outright lying or something out of left field hits Tesla in the immediate future, both of which I doubt, then Tesla's forecasts are very educated and based visible data it has access to. This makes its predictions a quarter rather easy and should be taken seriously. I doubt the street is expecting $150 million and possibly much more in cash flow from operations.

Additionally, Tesla's margins - which can make a substantial difference in its bottom line versus predictions, are likely to improve as the company grows.

Like any other company that is expanding (especially internationally), there's going to be a certain "learning curve", and costs associated with it when you're setting up shop for production for the first time. Anyone that has analyzed a startup company should be well aware of this.

As Tesla moves through these nascent stages of growth and into a company that has a firmer grasp on its production - as well as established plants and equipment necessary - we should see an increase in company assets and improving margins quarter over quarter.

According to International Business times:

Germany has reacted coolly to the Model S so far, and that doesn't bode well for the car maker out of the gate, but it's still too early to write off Tesla's European expansion, as the auto market in Europe has been reeling. September saw a modest 2.5 percent rise in vehicle sales in Europe, the biggest jump in more than two years.

Tesla set up an assembly plant in Tilburg, Holland, earlier this year, where it also houses its European headquarters.

Setting up shop - that's what Tesla is doing.

From a macro perspective, the overseas auto industry is still at a bottom, and is just starting to recover. It's likely that a positive recovery overseas in the macro market will positively affect Tesla moving forward, as well.

Finally, it's my "common sense" analysis that Tesla has an edge over other electric cars in the same way that Apple has an edge over Microsoft. Apple simply makes the "cooler" product, and Tesla simply makes the "cool" electric car.

While the short term future may hold a correction for Tesla's stock price (unless earnings REALLY surprise), I do believe that Tesla is going to be a long term success and I'm happy going "against the grain" and being bullish on Tesla.

Best of luck to all investors.

Source: Am I The Last Tesla Bull?