Tesla (TSLA) CEO Elon Musk has had a heck of a week.
Yesterday, shares of Tesla skidded to a halt after Morgan Stanley (MS) analysts warned that TSLA stock won’t likely maintain its breakneck speed of price appreciation. According to MS analysts, Tesla has plenty of headwinds ahead of it, including air quality regulations, the shift to autonomous vehicles and unstable demand in China.
Even Musk admitted, “I think our stock price is kind of high right now.” (Note: TSLA is a “B-rated cautious buy” in Portfolio Grader).
Then, Musk’s other big venture — Space Exploration Technologies — got a major windfall today in the form of a multi-billion dollar National Aeronautics and Space Administration contract. NASA awarded SpaceX — along with aerospace and defense giant Boeing (BA) — the right to shuttle astronauts to the International Space Station.
So for the first time since NASA retired its shuttle fleet in 2011, U.S. astronauts will be relying on American spacecrafts — earlier U.S.-manned space missions were conducted on Russia’s Soyuz rockets. The contract has a maximum payout of $6.8 billion — $2.6 billion of which would go to SpaceX and $4.2 million to Boeing. Currently, flying an astronaut on Russian rockets costs NASA $71 million per seat.
As exciting as these developments are for the scientific community and all would-be astronauts, I wouldn’t jump the gun and buy BA just yet (SpaceX is a closely-held company). As with all major contracts, Boeing will take years to iron out the kinks in this venture and turn a significant profit.
In the near-term, Boeing is expected to post sales growth in the low single-digits and earnings growth in the low-teens. Meanwhile, BA stock has recently seen a decline in institutional buying pressure. So, Boeing currently barely squeaks by with a “C-rating.” This makes BA a hold.
The latest technological breakthrough may make for a snappy headline but doesn’t always translate into a good buying opportunity.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
