This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

Would Apple Acquire Tesla?

NEW YORK ( TheStreet) -- In this article, I deal with two related issues:

1. Driving the Tesla (TSLA - Get Report) Model S for the first time, why are the investors so surprised that it is so awesome?

2. Should Apple (AAPL - Get Report) expand its product line into TVs -- or cars?

Last Friday saw Tesla's first customer deliveries of its Model S to non-insiders. The goal is to ramp production from one car per day now, to 80 cars per day by November, for a total of 5,000 delivered by the end of the year. Next year, the goal is to deliver at least 20,000 cars, probably with some upside from the Model X minivan, which launches at the end of 2013.

The Tesla investment-expectations setup to Friday's event was a barbell's worth of extremes. On the one hand, some people were extremely optimistic and enthusiastic about the prospects for the Model S. I am clearly one of them.

Yet others were extremely bearish on Tesla. Short interest is said to have been as high as 24%. The question is why? Why were so many people so extremely bearish about the Tesla Model S?

I think I've figured it out. It wasn't that the bears were so pessimistic about Tesla as a company, or specifically the Model S. It was that they didn't think electric cars -- any electric car -- could be successful. And with Tesla being the market's pure play on electric cars, how could you go wrong in shorting it?

Here is what I found: Most critics of electric cars have never driven one. They confuse the entirely different issue of political aversion to subsidies and other interventions in the market -- that I agree are always bad -- with the notion that an electric car can have overwhelming positive performance attributes.

Alternatively, they are skeptical of new technology in general, always magnifying a few narrow drawbacks of a new technology, while ignoring the revolutionary implications of looking at "the whole forest."

For an almost perfect analogy, I remember the smartphone debate back in 2000 and 2001: Being an early BlackBerry user, I said almost everyone would want email on their phone, as well as a great keyboard on which to type. I was told that this might be a market for a few thousand Wall Street bankers, lawyers and high government officials, that's all. The 1%.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
SYM TRADE IT LAST %CHG
AAPL $123.25 0.00%
F $15.98 0.00%
GM $37.31 0.00%
TSLA $185.00 0.00%
FB $83.30 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

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