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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Apple Shouldn't Buy Tesla, but (Blank) Should!

Stocks in this article: AAPLFBGMGOOGSCTYTSLA

Taking it one step further, what if it did that with one of the most highly in-demand vehicles in the country? One that is considered so valuable and scarce, that a used one actually costs more than a new one?

Tesla is ramping up production to an expected 35,000 vehicles in 2014, increasing from about 600 vehicles per week currently to 1,000 cars per week by the end of the year. Gross margins increased to 25.2% in the most recent quarter and are forecasted to climbed up to 28% by year's end. 

Telsa's valuation is easy to nitpick by any traditional standard, but comparing it to other automakers is simply foolish. It's not GM, no matter how many times the bears compare the valuations. Sure, it builds cars. But make no mistake: it's a technology company. And a luxury technology car company at that. 

It's perfect for Google, if Mountain View is looking to go the non-licensing route by producing its own cars. I just think that Google has nothing proprietary about its self-driving cars. Mercedes-Benz is doing it. BMW, Audi, GM. You name it, and there's an automaker working on it. What makes Google that much different or that much better? 

Of course, buying Tesla is becoming much more expensive now, with the market cap pushing $26 billion. And of course, someone looking to buy Tesla would have to pay a premium on top of that, not like there isn't a ton of premium already built into the share price. 

If Google, which has $58.7 billion in cash and short-term investments, were to acquire Tesla, it would get a hell of a brand with a hell of a product. 

I know it sounds crazy. And this would truly be a huge takeout story. Probably the biggest of the year if it happened. There's no doubt that Tesla is way overvalued.

But autonomous driving will absolutely be the future. Without a doubt. The public perception -- which, if you've done any research on autonomous driving, you will know that that's a bigger hurdle than the actual technology -- will come around, and likely much faster than most think. 

Eventually every new car will have autonomous driving. It will be the new normal and people will love it. Just like they'll love charging their electric car, refueling at charging stations, and never putting a drop of gasoline in their car again. 

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, 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
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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!

Markets

DOW 17,814.94 -2.96 -0.02%
S&P 500 2,067.03 -2.38 -0.12%
NASDAQ 4,758.2520 +3.36 0.07%

Brokerage Partners

Rates from Bankrate.com

  • 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