While sales figures in both the U.S. and China are key metrics for established automakers when it comes to investor appeal, there’s still nothing with more potential horsepower than a relatively new company with a cool product serving a wealthy demographic. That’s precisely what has made electric carmaker Tesla (NASDAQ:TSLA) a favorite on Wall Street through the first six months of 2012.
The stock saw a voltage surge of 14.2% year-over-year from January through June, and much of that has been due to excitement over its new Model S sedan. The Model S went on sale last month, and according to Tesla, the company had already received more than 10,000 pre-orders, with refundable $5,000 deposits for the vehicle. The company’s Model X SUV also has generated a power surge, with buyers already laying out $4,000 to have first dibs on the Model X.
Tesla shares seem poised to continue their rise, but the one caveat here is that the company recently received a downgrade from Wunderlich Securities, from buy to sell. Analyst Theodore O’Neill cut his rating and target price for the shares, citing Tesla’s likely reduction by about half of the initial 1,000 Model S units it originally planned to make this quarter. Although Tesla is sticking with full-year production estimates of 5,000 vehicles, any significant production delays could put a damper on revenue.
Still, Tesla shares are the growth story in the auto sector, and investors who are looking for alpha in the auto space need to think about electrifying their portfolios.
As of this writing, Jim Woods did not hold a position in any of the aforementioned securities. He does, however, own vehicles made by GM, Ford, Honda and Porsche