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 (Nasdaq: 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 | $3.25 billion |
| Industry | Automobile manufacturers |
| Trailing-12-Month Revenue | $201.2 million |
| Management | Co-Founder/Chairman/CEO Elon Musk CFO Deepak Ahuja |
| Trailing-12-Month Return on Capital | (34.8%) |
| Cash/Debt | $278.4 million / $226.0 million |
| Competitors | Ford (NYSE: F ) General Motors (NYSE: GM ) Toyota (NYSE: TM ) |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 49% of the 735 members who have rated Tesla believe the stock will underperform the S&P 500 going forward. These bears include 1technowizard and fabfabman.
This past summer, 1technowizard tapped Tesla as an untimely opportunity:
Economic incentives can't overcome a bad business model. When someone develops a low cost, fast chargi! ng batte ry, the equation changes. Until then, Tesla is selling a dream as practical as a jet pack. At least for the next 5-10 years, hybrids will be the dominant game changing technology.
Currently, Tesla even trades at a particularly lofty price-to-sales ratio of 18.6. That represents a massive premium to other auto plays like GM (0.3), Ford (0.3), and Toyota (0.4).
CAPS member fabfabman elaborates on the bear case:
When I look at the company financials, I don't understand how they plan to make money. Like Solyndra, Tesla has been heavily subsidized with gov money. Like Solyndra, Tesla plans to generate positive margins by (a) lowering production costs as battery technology matures (b) economies of scale. Per Tesla's presentations, only by means of state and federal carbon credit sales to other car manufacturers, Tesla can generate positive margins on vehicle sales. This is for both the Roadster and the Model S. Ouch!
Tesla has some unique IP and supplies good technology to other car manufacturers (Toyota and others), which however do not justify its market cap.
What do you think about Tesla, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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