Named after the genius physicists Nikola Tesla, Tesla Motor Inc. (NASDAQ:TSLA) is looking to bring that same sort of innovation to the car market. Although still a fairly young company by Wall Street standards, Tesla is looking to shake things up in the car market. Tesla is in the process of bringing its zero-emission Roadster to the public. Although Tesla has seen impressive growth of the past three years (over 1000%), the stock has not done much since its IPO back in 2010, ranging from $21 to a high of $36 a share.
To us, the story of Tesla is one of a longer term view. In a recent Morgan Stanley analysis, electric vehicles of various types should make up about 25% of the global car market within the next 12 years. According to Thomson Reuters, Tesla’s enterprise value is more than five times the average analyst estimate of revenue for 2012. Add to that Tesla’s ability to go revenues each of the past three years (in a less than stellar economy), the stock looks poised to break out in the next few years.
Although Trefis likes Tesla longer term, one must remember that Tesla is still in its infancy. Much like other young tech companies, Tesla is burning cash at an alarming rate. The car maker is producing the Model S sedan with the hopes to make at least 20,000 in 2012. Another potential downfall for Tesla would be that the big guys (Ford, General Motors, Nissan, etc…) all have their own electric cars in the works.
The story here is a good one, especially considering that being green is something that will only get larger moving forward (especially if oil prices continue to go higher). If things work out for Tesla, some analysts have predicted a target price of over $135 over the next five years.