Will Tesla (TSLA) Stock be Charged by Selling its Used Cars?

NEW YORK (TheStreet) -- Tesla Motors (TSLA) shares are down 1.36% to $222.97 in afternoon trading on Friday, but news of the launch of a used vehicle portal on its website could help the stock today.

The company now allows cutomers to purchase used Tesla vehicles from its website at a discounted price while also providing maintenance assistance and an extended 4-year or 50,000 mile limited warranty.

The used vehicle market is important to the company in order for it to gain new customers as well as establishing that its vehicles have resale value, according to the Wall Street Journal.

 "There are a whole new set of buyers potentially exposed to the brand now," a Kelley Blue Book analyst told the paper.

Separately, TheStreet has further coverage of Tesla and the unveiling of its new energy business, here.

TheStreet Ratings team rates TESLA MOTORS INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TESLA MOTORS INC (TSLA) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, poor profit margins and generally high debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 561.8% when compared to the same quarter one year ago, falling from -$16.26 million to -$107.63 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$86.40 million or 166.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 34.46%. Regardless of TSLA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -11.25% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio is very high at 2.51 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, TSLA's quick ratio is somewhat strong at 1.02, demonstrating the ability to handle short-term liquidity needs.
  • You can view the full analysis from the report here: TSLA Ratings Report
Must Read: Warren Buffett's Top 25 Stocks for 2015

More from Markets

Dow Falls, S&P 500 Trades Lower as P&G and Apple Slump

Dow Falls, S&P 500 Trades Lower as P&G and Apple Slump

Video: Jim Cramer on Apple, Procter & Gamble, Nucor and Acacia Communications

Video: Jim Cramer on Apple, Procter & Gamble, Nucor and Acacia Communications

Video: Jim Cramer Reveals Why Stocks Are Moving Lower Thursday

Video: Jim Cramer Reveals Why Stocks Are Moving Lower Thursday

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Video: The Road to S&P 500 2,800 Is 'Slow and Choppy'

Video: The Road to S&P 500 2,800 Is 'Slow and Choppy'