Why Tesla's Road Gets Easier, Not Harder, From Here

NEW YORK (TheStreet) -- Tesla  (TSLA) is about to drop $20 a share at the opening, after reporting a first-quarter loss of nearly $50 million and breaking the first rule of a bearish market by saying its capital spending jump this year would mean short-term red ink on the free cash flow line.

Pity. If pigs get fat and hogs get slaughtered, now looks like a good time to be a pig.

You can call the 32% drop in Tesla from its $52 week high to today's likely opening anything you like: a needed correction to irrational exuberance, or yet another manifestation of the market's 14-year aversion to risk since the Internet bust (interrupted by the odd cloud or social-networking mania).

But what just happened is that the three- to five-year math for Tesla got remarkably sensible, at least if one thinks the upcoming Model X SUV will be as big a hit as the Model S sedan that will deliver 35,000 units this year and probably keep growing from there. Can you imagine Tesla at a price-to-earnings ratio of 30? You can actually see it pretty clearly from here. Some bubble.

Some numbers: At $180, Tesla stock commands 98 times this year's expected profits per share,  and 47 times projected 2015 EPS. These are numbers that exclude some charges under generally accepted accounting principles, it is true, but that's common for growth stocks. On that non-GAAP basis, Tesla made a $17 million first-quarter profit, or 12 cents a share.

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