On Thursday, analyst Toni Sacconaghi of AllianceBernstein initiated coverage of Tesla (TSLA - Get Report) , announcing that he believes the electric carmaker is an industry disruptor along the lines of Amazon (AMZN - Get Report) , Netflix (NFLX - Get Report) , and even Apple (AAPL - Get Report) . However, the company's bears are finding these claims a bit hard to swallow.
"The traditional automotive market is being disrupted, and the source of it is one upstart player - Tesla," Sacconaghi writes. "We have seen this pattern play out before (with AAPL, NFLX, AMZN), where a single company triggers a sea-change in outlook among consumers and, eventually, among traditional incumbents, who further validate the shift."
Sacconaghi has set a price target of $250 on Tesla's stock, which is middle-of-the-road and represents a potential gain of only 2.5% from today's price around $244 per share. That's hardly "disruptive."
However, Sacconaghi predicts that Tesla will gain steam and lead the charge when electric cars carve out a bigger market share. But even if the analysts' electric dreams come true, don't expect big gains from Tesla anytime soon. Sacconaghi's model sees electric vehicles grabbing 50% of the market by 2050. Thirty-three years is quite a while to wait.
True, Tesla's CEO, Elon Musk, is a visionary who would certainly like to disrupt the automobile market. But in truth, Tesla is lagging behind the competition. Plenty of other carmakers, as varied as General Motors (GM - Get Report) and BMW (BAMXF) , are creating efficient electric cars that undercut Tesla's in price.
But electric cars themselves just haven't caught on in popularity. True, lower gasoline prices have made Americans reluctant to make the switch, but the real revolution in the car industry will more likely involve ride-sharing technology. And even though electric power will certainly play a part, Tesla's behind in this race. Uber has already established relationships with Ford Motor (F - Get Report) , Daimler (DDAIF) , and Volvo (VOLAF) - but not Tesla.
This week, Airbus (EADSY) unveiled plans for a modular passenger capsule that either travel on the ground via an electric chassis or in the air via what can best be described as a giant drone. Although the "Pop.Up," as it's called, may seem the stuff of science fiction, this is the technology of the future.
Plus, it's just plain inaccurate to company Tesla to Amazon, Netflix, or Apple. These companies brought out revolutionary products that - cheesy as it sounds - revolutionized aspects of daily life. Their upstart products quickly undermined entire industries. And they have quickly been embraced by the general public.
Tesla would need to shed its luxury car image and really ramp up the mass production to follow their model - both of which are unlikely to occur anytime soon.
Tesla is a company that struggles to make a profit. It's got lots of debt. And it just hasn't delivered on its promises yet. Rather than being a market disruptor, it's a novelty. Investors should continue to avoid its stock.
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