Tesla Shares on Another Joy Ride
Tesla’s newly listed shares roared out of the garage again today, climbing higher still in their second day of trading. After spiking 40.5 percent Tuesday, even as the broader markets tanked, shares of the electric-car company are on another tear this morning, up 22.23 percent at $29.20. Quite a run for a stock initially priced at $17.
But when a single share of Tesla (TSLA) made more Tuesday than the entire company has to date, is it sustainable?
A troubling and entirely realistic question, though one that seems to have been overlooked–or purposely ignored–by investors. Though Tesla’s technology may be formidable, its fundamentals are not. It is a company with mounting losses, falling revenue, no real production chain to speak of and a single $109,000 product, the Roadster, of which its has sold only 1,063. Sure, the company has plans for a cheaper vehicle, the $50,000 Model S sedan, and that seems to be part of what has investors so juiced about its IPO. But while Tesla says it will bring the S to market in 2013, the company admits it’s not a sure thing.
“We have not completed the design, component sourcing or manufacturing process for the Model S, so it is difficult to forecast its eventual cost, manufacturability or quality,” the company said in its IPO filing.
So why is Tesla a buy at $29.20–or, for that matter, $17?