The Verdict – TSLA Stock or SCTY Stock?
There’s no doubt that Elon Musk will go down in history as one of the greatest entrepreneurs. He may even eventually reach the status of someone like Apple’s (AAPL) Steve Jobs. Consider that Elon Musk not only built SCTY and TSLA but also PayPal, which is a huge driver for eBay (EBAY). Oh, and he also is the mastermind of SpaceX.
As a result, when it comes to SCTY stock vs. TSLA stock, it is not an easy choice. Again, both have staged big rallies and have nosebleed valuations. SolarCity stock is trading at 30 times sales and Tesla stock is at 11 times sales.
In the near-term, though, SCTY stock may be the better bet. After all, the revenue model is a bit more stable because it is recurring. For Tesla Motors, there can be much volatility. Demand can easily fall, and there have also been supply issues. In the latest quarter, TSLA failed to meet expectations and the result was a big drop in the Tesla stock price.
There have also been concerns regarding the safety of the Tesla Model S (there have been three Tesla fires so far). And while German regulators cleared the Tesla of safety defects, the NHSTA verdict is still out.
In light of all this, I would pick SCTY stock over TSLA stock.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.