NEW YORK (TheStreet) -- Comparisons between Tesla Motors (TSLA - Get Report) and Apple (AAPL - Get Report) have long been bandied about by the press, Wall Street and some in Silicon Valley. Both focus on cutting-edge technology, place a premium on aesthetics and have done well in the higher end of their respective markets.
Now, Tesla CEO Elon Musk is getting in on the act.
On the fourth-quarter earnings call, Musk noted that the company is "going to spend staggering amounts of money on CapEx."
In the letter to shareholders, Musk noted that those "staggering" capital expenditures would cost around $1.5 billion. Tesla continues to expand production, which has been an issue for the company for some time. And Palo Alto, Calif.-based Tesla has other major projects: completing the development of the Model X, which is slated to start shipping in six months; building the Gigafactory; building out the company stores and service centers; and expanding the Supercharger network.
By justifying the huge increase in capital expenditures, Musk said that the company could potentially become like Apple when it comes to valuation. Musk commented:
"If you take this year's revenue, around $6 billion or thereabouts, and if we are able to maintain a 30% growth rate for 10 years, add to your 10% profitability number, and have a 20 P/E, our market cap would basically be the same as Apple's is today. That's going to require a bit of -- on the order of $700 billion -- obviously, getting there will requires some significant CapEx, but I am hopeful that we can do this without any significant dilution to the company, maybe minor dilution but nothing serious."
Such a comparison would normally make investors and analysts go crazy. But sentiment on Wall Street about Tesla is exceptionally low, after the company missed fourth-quarter results and talked about higher spending levels to come.
Shares were down 6.6% to $198.65 early in Thursday morning trading, on the back of several price target cuts and a few downgrades.
J.P. Morgan analyst Ryan Brinkman downgraded shares to underweight from neutral following the weaker-than-expected fourth quarter, after issues in the third quarter as well.
"To us, 3Q & 4Q taken together serve to highlight the execution risk associated with scaling production -- a concern we have struggled with for some time in the context of the firm's clearly demanding valuation," Brinkman wrote in the note.
Brinkman also highlighted that the "profound" drop in fuel prices would hurt Tesla and its Model 3. Increased competition for the Model S and the upcoming Model X and Model 3 -- from the Mercedes-Benz C-Class plug-in hybrid, the Volkswagen (VLKAY) -owned Audi Q7 e-Tron plug-in diesel hybrid and the General Motors (GM - Get Report) Chevrolet Bolt -- could also hurt Tesla. Brinkman lowered his price target to $175 from $180.
A big problem for Tesla is that the company cannot make enough products to meet its goals due to production holdups. In that, Tesla has similar problems to Apple's iPhone production backlog in previous quarters.
Credit Suisse analyst Dan Galves rates Tesla shares outperform but lowered his price target to $290. Galves said that the comments about demand were encouraging, despite the shortfall, as Tesla said there were 10,000 Model S orders pushed out to 2015.
"We believe this is probably the biggest book of firm orders that Tesla has ever had... impressive given that Model S has been in the market for 2.5 years," Galves wrote in a note.
Tesla is still production-constrained. But comparisons to Apple, which recently surpassed $700 billion in market cap and is the most valuable public company in the world, may be a bit premature.
Musk and his team have grand ambitions -- now it's time to finally deliver.
--Written by Chris Ciaccia in New York
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