Will Solar Roofs Power Tesla Motors Inc (TSLA)?

Advertisement

Tesla Motors Inc (NASDAQ:TSLA) stock owes much of its meteoric rise on Wall Street to its cool, hip image as one of the most innovative companies in the world. Investors are constantly curious about what new trick CEO and founder Elon Musk might have up his sleeve. The answer, apparently, is … roofing.

Will Solar Roofs Power Tesla Motors Inc (TSLA) Stock?

OK, so it’s solar roofing (for homes, not cars). Still, anything roofing related isn’t likely to move the needle much for TSLA stock — at least not in the same way the Model S did. Musk’s solar roofing experiment certainly lacks sex appeal, but will it make up for it in substance?

First, let me explain what it is.

Solar Shingles: The Next Tesla Stock Driver?

For starters, solar roofing is a large market — or at least roofing is. About 5 million U.S. homeowners put new roofs on their houses every year. Musk is betting big that a large portion of those installers will want to put solar shingles on their roofs.

“Solar shingles” are a Tesla and Solar City Corp (NASDAQ:SCTY) creation; they’re shingles that are embedded with high-efficiency solar cells. The shingles come in four different styles: Tuscan, slate, textured glass and smooth glass. As with Tesla’s Model S luxury electric sedan, customers will pay a premium for solar shingles.

The question is, how many?

Will a solar shingle excite high-end consumers the same way the first ever long-distance luxury electric car did? Probably not. You won’t see Tesla stock suddenly jump 500% the way it did in 2013 after the Model S debuted.

But could it at least revive the stock on the heels of a down 2016? Quite possibly … but not on its own.

Tesla stock is down 21% through the first 10 months of the year, and more than 28% since peaking at $265 back in April. Investors don’t seem to care much for Tesla’s SolarCity buyout, finalized on Aug. 1. TSLA shares have slipped nearly 18% in the three months since.

On the surface, the solar shingles experiment seems like Musk’s attempt to make SolarCity more appetizing and relevant to Tesla customers and investors.

I’m not buying it … but that doesn’t mean I wouldn’t buy TSLA stock.

There are plenty of other things besides solar roofing in the Tesla hopper that could re-energize the stock, starting with the Model 3, the company’s first “affordable” electric car. That’s set to release sometime next year, and hundreds of thousands of customers have already plopped down $1,000 deposits to reserve one.

Meanwhile, the company is still building its new Gigafactory in the Nevada desert, and sales of its Model X SUV are soaring.

Also, the company is coming off just its second profitable quarter ever, and could be on track for a third this quarter.

Plenty of Catalysts for TSLA

There’s nothing wrong with Tesla as a company, but Tesla stock is still shaking off the cobwebs from the SolarCity deal, which many Wall Street pundits found to be a headscratcher. As investors start to wrap their heads around the Tesla-SolarCity union, they’ll begin focusing again on all the good things happening with this former market darling.

A turnaround in this floundering market wouldn’t hurt either.

Maybe the solar shingles will be a hit. Maybe they’ll revolutionize the roofing industry, and help better establish SolarCity in mainstream America. But even if none of that happens, Tesla stock will be back. I continue to think TSLA is one of the best long-term investments out there.

Shingles or no shingles.

As of this writing, Chris Fraley did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/11/tesla-motors-inc-tsla-stock-power-ipmedia/.

©2024 InvestorPlace Media, LLC