Depending on who you ask, Tesla Motors‘ great success in the last few years is either very encouraging or something of an object of suspicion.
Starting from its initial public offering of $19/shr in July 2010, TSLA stock has since hit a high of $137.49/shr. An overall 716% increase in three years. According to Investopedia, the most reliable and stable stocks grow at a rate of around 10% annually. Investing in faster-growing stocks can make people a lot of money in the short term, but it’s always difficult to know when to back out before you lose everything.
I’ve seen some reports that suggest that Tesla Motors stock prices and their rise could only be the prelude to a precipitous fall. Basically, what they were saying is that Tesla Motors’ success is too good to be true and that buying Tesla Motors stock is a gamble at best. Is the tremendous growth of Tesla Motors a sign of good things to come, or should investors be twitchy on the sell button?
According to a recent report completed by Deutsche Bank, Tesla Motors stock is expected to rise to $160 in the next few years, just a 24% increase over yesterday’s peak or $134.62/shr. Deutsche Bank is confident and says that it’s OK to buy more stock. What gives them this confidence?
Five Reasons to Buy Tesla Motors Stock
- Consumer Reports reviews show that early quality problems with the Tesla Model S have been overblown. New clients don’t have as much to worry about, now that production is at full-speed.
- Speaking of full-speed production, the 20,000 or so orders per annum are easily matched by Tesla Motors’ production capacity. There were some early concerns that Tesla manufacturing would never catch up to the demand, leading to disenchantment with the brand.
- Tesla Motors’ Supercharger Network is expanding and will most definitely sustain the Tesla Model S’, and future models’, competitive advantage over other electric vehicles.
- Tesla Motors is expected to reach 25% gross margins in the 4th Quarter 2013, possibly >35%, especially now that Tesla Motors no longer has to worry about payouts to the Department of Energy.
- The 3rd-Generation Tesla Model S [Model X, too?] is expected to close the gap between its own pricing and that of conventional vehicles, making it that much more affordable and desirable.
Photo credit: jurvetson / Foter / CC BY
