Opinion Roundup: Tesla Stock (TSLA) Not So Hot


Image: Fogcat5/Flickr

Tesla unleashed about 13 million shares of stock onto the NASDAQ this morning. TSLA stock opened $17, and has since increased to $24 at time of writing. I think that any initial TSLA gains are speculation (and elation, given that this is the first automaker IPO in 50+ years). If you want in on TSLA, my guess is that you should have gotten in on the opening bell and have day trading software. Some experts agree with me; others think differently. Here’s a quick opinion roundup on TSLA:

Ben McClure/Minyanville: …investors, please ask yourselves, does a niche-market electric-car company, that so far has managed to sell just over 1,000 vehicles and continues to generate staggering losses, really have a future as a mass-market automaker?

While the company has produced total revenues of $147.6 million, it lost $31 million in the first nine months of last year and to date has accumulated losses worth nearly $240 million. It will be another two years before its family car hits the market, so Tesla’s losses are sure to get a whole lot deeper. Every red cent of the $220 million or so in cash raised from this week’s IPO will more than likely get chewed up in the next year.

…Thanks to new stringent fuel-efficiency standards, every mass-market carmaker is working on electric cars. For that reason, Tesla stock deserves much caution.

Jonathan Welsh/Wall St. Journal: For now the outlook is promising. Not only did the IPO take place but it included more shares at a higher price than expected. The company boosted the number of shares to as much as 13.3 million and the price to $17 per share, for a total value of $226 million. The company previously had said it could sell up to 11.1 million shares at a price of $14 to $16 per share, or a total of $178 million. The increase in part reflects interest in electric cars that is greater than expected and growing surprisingly fast. Tesla is trading on the Nasdaq stock market under the symbol TSLA.

Recently many companies have been cutting the size of their IPOs because the stock market has been so volatile. So Tesla must feel it has something special, and it does. The company has sold more than 1,000 Roadster in the last two years and is still the only true volume seller of highway-worthy electric cars for consumers. It will be awhile before companies like Nissan, BMW and Mitsubishi catch up.

MarketWatch: …the folks that really dig the Tesla IPO are the gamblers. One reason so many people are excited about the Tesla deal is because it’s an IPO, and we haven’t had many of these in the past few years.

There’s the thrill of being one of the first shareholders, the thrill of flipping it and the bragging rights that go with whatever profit can be had from the first chaotic hours of trading in a new stock.

Then there’s the nostalgia of buying a pig in a poke, an acceptable investment strategy back in the go-go days of Silicon Valley startups. Remember when 22-year-olds could raise gobs of cash by claiming they’d developed a really cool Internet thingie? The gamblers were there, raining money on little companies with no market-tested business or cash flow.

Jim Cramer (via The Street)
: On Jim Cramer’s Stop Trading! segment Monday on CNBC, Cramer took one look at the Tesla IPO and declared that he thinks it’s going to be a bad company.

“It’s sold like 1,000 cars,” Cramer said, while noting that this IPO is “one of those things that people are excited about.”

Sheldon Liber/BloggingStocks
: I say stay away. First and foremost, investors should take note of the fact that most IPO’s end up as losing propositions. In the case of Tesla, which lost over $55.7 million last year and will lose more this year, the bleeding has just begun.

The car manufacturing business is very capital intensive and Tesla only hopes to stem the tide in 2012 when it projects a production run of 20,000 Model S all electric sedans for $50,000 each.

The upside versus the down side. The upside is the “cool factor”. The downside is everything else.

Wall St. Cheat Sheet
: …owning shares of TSLA will be a status symbol in certain social circles. But if you are like me and invest to make money, the shares are about as high risk as Japan winning the World Cup: it can be done, but I wouldn’t make that bet even if you let me use your money.

The Wall Street Journal reports Tesla “has never been profitable.” Neither has my neighbor’s 17-year old son. The difference is he didn’t burn through $25.5 million in Q1.

If you are interested in Tesla, I recommend waiting to see how things develop with their new $50,000 Model S. The car business is a fairly crappy business, and there’s lots of room for Tesla to run out of juice before getting plugged in.