I'm loving Tesla (TSLA) for the long term.
Oh, and by the way, that pesky little fire issue? Over. Done. Finito.
Want to know how to run a public startup company and exceed the lofty goals set by the public, which always wants everything bigger, better, and faster? Look no further than Tesla. Tesla has been a lesson in how to execute as a company and holds serious long-term promise, despite its valuation - which is the main bearish argument against the company.
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. Today, it's up 5% on the news that, as expected the NHTSA has reaffirmed its 5-star safety rating on the Model S.
I spoke about this in my last couple of articles, claiming that it was going to be a short-term positive catalyst for the company:
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.
And, lo and behold, it was announced yesterday morning that the NHTSA's findings reaffirmed the safety of the Model S. It was a nice little Christmas present for Tesla longs. The press release is great. It's written short, sweet, concise and to the point:
The National Highway Traffic Safety Administration (NHTSA) has reaffirmed the 5-star safety rating of the Tesla Model S overall and in all subcategories for Model Year 2014, confirming the highest safety rating in America. While Tesla is awaiting feedback from NHTSA regarding their investigation of recent fire incidents, the German Federal Motor Transport Authority, Kraftfahrt-Bundesamt (KBA), recently concluded its review of the incidents, finding no manufacturer-related defects or need for further action.
It is worth noting that a Tesla vehicle is over five times less likely to experience a fire than the average gasoline car and that there have been zero serious injuries or deaths for any reason ever, fire or otherwise, in a Model S. Over the course of more than 100 million miles driven in almost every possible terrain, weather and crash conditions, the Tesla Model S has consistently protected its driver and passengers, achieving the best safety track record of any car on the road.
Even more so than the facts of the press release, I love the way Tesla has written it. They present the facts, and take the liberty of writing a paragraph simply to shove it in the face of the shorts who have claimed the Model S isn't as safe as the company has said it is. If this PR, as a long, doesn't make you feel good about the long-term prospects of the company, I don't know what's going to.
This should end the fire argument once and for all - the simplest explanation was, of course, the correct explanation:
It doesn't take a doctorate student in physics to understand that when you take any piece of electronic technology - gas powered or electric, 18 wheeler or golf cart - and slam it through a concrete wall and several trees at high speeds, it shouldn't be a surprise if it catches fire. Then, after the initial fire, it shouldn't be a surprise if other flammable parts go up in flames. That's just the way of the mechanical engineering world - cars catch fire all over the world, all day, every day.
Additionally, as the company continues to push internationally and expand its supercharger network through Germany and Europe, it remains a great time to be bullish on Tesla.
This is a young, aggressively growing company - throw the valuation out the door on this one for a while. Although it's first in the line of companies that will be susceptible to major market pullbacks, it's likely Tesla is going to continue to cruise on the back end of this news.
Tesla has found the perfect recipe:
- Niche market with serious demand.
- Superlative product
- Visionary executives
I remain bullish on Tesla through 2014 and long term.
Best of luck to all investors.