This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Tesla Motors: The Apple of Automakers

Stocks in this article: JPM TSLA GM F AAPL

JPMorgan believes that "the investing community (and the majority of the automotive industry) is substantially underrating Tesla's potential, not just on electric vehicle powertrain technology (where converts arguably have been made of Toyota and Daimler) but more broadly on its ability to deliver world-class non-powertrain-related vehicle engineering and to eventually grow into a full-line premium carmaker with atypical cost competitiveness." The research team just visited Tesla's new production facility and met with management, which confirmed the bank's bullish view. JPMorgan's $30 target was derived from a discounted cash flow model.

However, several of the bank's assumptions are notably cautious. For example, it forecasts a terminal operating margin of just over 8%, standard for German luxury carmakers, whereas Tesla management forecasts a stable mid-teens operating margin over the long run. If management hits its projection, a higher share price is warranted. JPMorgan forecasts a loss of $1.88 a share in 2011, a loss of $1.46 a share in 2012 and a profit of $1.51 a share in 2013. Still, there may be material upside if demand for the S Model exceeds expectations. A video of the S Alpha version, operating in real-world conditions, was released online in January. The video received 85,000 hits in a matter of hours.

Ultimately, Tesla's success depends upon brand perception with global consumers. Environmentally conscientious, tech-savvy customers have propelled one company, Apple, to the rank of sector hegemon. It seems that Tesla is striving to be the Apple of auto, even modeling its showrooms in the likeness of Apple stores. But, risks abound. Although Tesla's the first mover in the electric-car space, many other first movers failed to achieve lead market share because of competitive pressures. The company's distribution network is far behind established peers and its capital limits marketing potential until cash flow ramps up. Nevertheless, Tesla's unlikely ascent is accelerating.

-- Written by Jake Lynch in Boston.


Become a fan of TheStreet on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
3 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs