Report Cards for Automakers – Tesla Motors (TSLA)
Elon Musk’s Tesla Motors (TSLA) has turned the automotive industry on its ear, and accolades (including honors from Motor Trend and Consumer Reports) and have been plentiful. TSLA has convinced the auto industry that green can be beautiful, as the $69,000 model S electric roadster makes clear.
The larger question is, can TSLA make a beautiful, all-electric vehicle that captures auto-buyers’ fancy for $35,000?
TSLA is growing its market in Europe, making a commitment to expand its so-called Supercharger network. Musk’s plan to build a “gigafactory” to lower battery costs and boost power also is dazzling the popular press.
The buzz about TSLA is great, but the hefty valuation is too rich for my blood. TSLA has a PEG ratio of nearly 4 and a forward P/E of 64.7 places the stock solidly into overbought territory. You have to pay for growth, I know, — this is just a traditional value-lover talking. Obviously the growth potential is huge, so if you’re comfortable with overpaying, you’re at least getting into something worth buying.