1-Star Stocks Poised to Plunge: Tesla Motors?

by Brian D. Pacampara, The Motley Fool Jul 17th 2012 9:41AM
Updated Jul 17th 2012 9:52AM

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electric vehicle maker Tesla Motors (NAS: TSLA) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Tesla's business and see what CAPS investors are saying about the stock right now.

Tesla facts

Headquarters (founded)	Palo Alto, Calif. (2003)
Market Cap	$3.8 billion
Industry	Automobile manufacturers
Trailing-12-Month Revenue	$185.4 million
Management	Co-Founder/Chairman/CEO Elon Musk CFO Deepak Ahuja
Trailing-12-Month Return on Capital	(46.3%)
Cash/Debt	$243.6 million / $365.9 million
Competitors	General Motors Pininfarina Toyota Motor

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 44% of the 921 members who have rated Tesla believe the stock will underperform the S&P 500 going forward.

A few months ago, one of those Fools, Straightener, succinctly summed up the Tesla bear case for our community:

Currently this stock is priced as though they are going to execute their business plan flawlessly. As with any auto start-up, there are bound to be bumps along the way, and electric cars are not really taking off as previously expected. They have always lost money, and will probably continue to do so for the foreseeable future.

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The article 1-Star Stocks Poised to Plunge: Tesla Motors? originally appeared on Fool.com.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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5 Comments

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philblock

As a famous man once said, "well, there you go again" (hope I got that right).
1. The finest designed and engineered ICE is useless without fuel--gasoline, natural gas, diesel oil, etc.
2. The finest designed and engineered EV is useless without a power supply--rechargeable batteries or Fuel Cells--about the only two power supplies anyone has come up with for an EV.
3. Sure, EVs are nice to drive and basically have very low in pollution output. For most people the auto is not a toy but a means of DEPENDABLE transportation. Because a good auto today is expensive, most people want a car that not only meets their use for short range, but for long range when called for.
4. Therefore, the rechargeable battery operated EV is limited to the people who have the money for a short-range auto and a second auto for long-range (that 1%?).
5. ONE STAR! Well, in the age of always giving the underdog the advantage, I guess that is acceptable.
6. . The Tesla is another Tulip Mania (look up your history) and will go the same way as all the rechargeable battery auto companies have gone over the past 100 years. Why? Because of the Achilles heel--the rechargeable battery. Now--return to nos. 1and 2 and re-read-please.
Thank you for reading my comment.

July 17 2012 at 10:24 PM Report abuse Permalink rate up rate down Reply

1 reply to philblock's comment

wlcovusmc

You are welcome. I too am a Reagan fan, good selection of quote; however, it can be used for the anti-EV argument as well.

Point three of your comment is not true though. If you are talking about Tesla's current product (Model S)...the target conumer is not reliant upon the vehicle for vacations and long range trips. The consumers buying the Model S are upper middle class that would rather plug in than mess with gas stations, like the style AND the niche of this unique product. Not unique in the fact that it is electric (I looked up my history, thanks) but unique in how it has been marketed, produced and delivered. Therefore, if we are talking about Tesla, your fourth point does not even apply ($60k-$80k product makes that obvious).

Now, point six does not apply because the rechargeable battery has come much further (read your history) in modern history and allowed for the designing of a much superiour product than in 1920.

I am pretty sure you are hoping Tesla doesn't succeed because your points really lack the depth to solidify an argument FOR a one star rating.

An almost identical article on Tesla came out on Motley last year (one star on Tesla).

Additionally, for the article to base its argument based off of a miscellaneous comment (with zero convincing references) from a subscriber is ridiculous.

Thank you for reading my comment.

July 17 2012 at 11:53 PM Report abuse Permalink rate up rate down Reply

bbm9456

Motley Fool has become nothing more than a spam campaign. What a disappointment.

July 17 2012 at 4:19 PM Report abuse Permalink rate up rate down Reply

devmonkey

Yeah.. Motley Fool. What a pitch. "Hey TSLA's a one star stock, but wait.. there's more. We've found a better investment opportunity for you viewers! NOW, how much would you pay? Don't answer yet!"

What is it this time? Something that's got Bill Gates scared? Possibly a 3-D printer company? Where's the soundtrack of the paid studio audience?

July 17 2012 at 4:03 PM Report abuse Permalink rate up rate down Reply

thephenx

DO you guys "print" opposing views every day in the hopes of making money short selling? I wonder....

July 17 2012 at 10:53 AM Report abuse Permalink +1 rate up rate down Reply

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