I've been writing on Tesla (TSLA) a lot lately, but the company makes it easy because it is just moving so damn quick. Long term, I'm extremely bullish on Tesla.
My last article on the company wasn't so much about its current valuation or its stock price, but rather a "bird's eye" look. I wanted to try and identify how Tesla has performed and will perform in the long run as an investment by zooming out on the company and looking at the big picture a bit.
The nice thing about Tesla is no matter what the bear argument - overvaluation of the stock, potential car fires, non-viability of electric vehicles overseas - Tesla just seems to put its head down and keep executing.
In my last article, I wrote:
Tesla has delivered on every single goal they've set out for themselves so far, and have almost delivered on every extremely forward looking goal the market has set out for them. In the private sector, to make the progress that Tesla has made over the last three years would be excruciatingly fast - lightning fast, almost to the point of unheard of. What we forget is that the public markets demand results, and they demand them now - it's not a forum for companies that require patience to show results. In the face of that, Tesla has delivered - moving at breakneck speeds, and they arguably deserve their extremely aggressive valuation.
Much of my argument for the company was based on the fact that they were going to be expanding into China (and other overseas markets), that they're doing it faster than most new companies would be doing it, and that through offering an "economy" Model E in coming years, Tesla is going to be able to "re-infiltrate" the U.S. market once it's been super saturated with purchases from "luxury" car buyers.
With regards to Tesla as an investment, the stock has pulled back over the last 3 months, starting with the company's most recent earnings report. Although it's off over 17% in the last three months, Tesla has yielded 300%+ in the last year, and is (in my opinion) very likely to double in value several times over in the coming years.
Just as Tesla continues to dot their Is and cross their Ts in China - which has included such formalities as fighting a trademark dispute over their Chinese name and figuring out imported electric car tax policy - they continue to expand internationally.
Tesla announced via its Twitter (TWTR) just days ago they they've opened their first superchargers in Germany.
The company notes that the superchargers are connecting major German cities, "the Netherlands with Germany, and make traveling from Munich to Zurich easier - all for free!". One more country, one more step in the right direction.
This is Tesla executing right before your eyes. The company continues to pay no heed to the bears that come up with countless reasons as to why they can't/won't be successful, and Tesla just simply keeps on delivering.
In just one year's time, Tesla wants to have the majority of Europe accessible and connected through its superchargers. This diagram is from Tesla's website and shows projected roadway availability in a year:
As old pros in the public markets know, your bears and detractors are never going to go away - that's part of being a public company. Success and execution is the only way to stick it to these people, and Tesla is becoming an expert in it.
And, Tesla can do it in the long-term.
Additionally, Tesla had been involved in a recent incident regarding a fire in a Southern California garage - where a socket hosting the plug to a vehicle caught fire. At first, it was questioned whether or not Tesla's vehicle or battery had something to do with it. It was reported by Bloomberg on Thursday morning, that Tesla said the Model S charger didn't cause the fire:
Investigators can't conclude whether the fire started in the wall socket or was caused by the charger, and found it had nothing to do with the battery, Steve Concialdi, a spokesman for the Orange County Fire Authority, said by phone yesterday. Shares of Tesla, led by billionaire Elon Musk, have plunged 23 percent from this year's peak in September after three reports of battery-related fires in the Model S in October and November. The U.S. National Highway Traffic Safety Administration opened an inquiry Nov. 19 after the last fire.
"The cable was fine on the vehicle side; the damage was on the wall side," Tesla said of the garage fire. "Our inspection of the car and the battery made clear that neither were the source" of the fire, it said.
As you likely know already, the fire issue has been a dark cloud hanging over the head of Tesla for months now, since the populous seems to think there is something out of the ordinary when a car with electrical components catches fire after slamming into large inanimate objects at high speeds. Crazy, I know.
The remaining short term catalyst will be the result of the NHTSA investigation here in the U.S. I'm convinced that the NHTSA investigation will yield nothing, as it was reported that Tesla had passed a German Federal Motor Transport Authority examination into the recent Model S fires. It was reported by Street Insider weeks ago that no defects were found and that the news will foreshadow similar good news from U.S. authorities:
Kwei believes the negative news from the vehicle fires is priced in, with short interest increasing to roughly 32% of the float following 3Q earnings (from 27% prior). "We expect a neutral NHTSA investigation (either no recall or minor modifications required) to be a positive catalyst for the stock, barring another freak accident/negative news headline. Although it is difficult to believe that three reported car fires in the span of six weeks is the result of pure chance, it would appear equally improbable that no major incidents were reported in California, which is home to the largest concentration of Tesla vehicles."
Based on this coming catalyst, which I'll believe to be positive, combined with Tesla's continued lightning-fast growth worldwide, the future is very bright for the company.
If Tesla can continue to hold Musk's interest and can continue to execute as quickly and efficiently as they have now, there's no reason this stock can't double several times over in the next few years. Long term, I remain Tesla - who is offering us, right now, a case study on how to shut the bears up and execute as a public company.