Telsa Stock Revving Up for a Repeat of 2013? Telsa Motors (TSLA) just inked a deal with AT&T (T) to add Internet connectivity to and power engine diagnostics of all models in its next generation of popular electric vehicles (Audi announced a similar deal for its 2015 lineup of A3s), following the lead of General Motors (GM), which last year signed an agreement with the communications powerhouse to outfit the Chevrolet brand.
The automaker’s decision to connect its cars to AT&T’s wireless network—the same one used by cell phones, computers and tablets—is the latest in a string shrewd business moves that helped the electric car maker go from being an ambitious upstart with more than a few naysayers to a darling of Wall Street.
Indeed, the California-based company has come a long way since being one of the most-heavily shorted stocks in 2010 and 2011. Last year, it posted its first ever profit, selling over 20,000 of its coveted vehicles, expanding its envied supercharger network, seeing its Model S sedan named Motor Trend’s 2013 Car of the Year and watching its stock soar, all while rewarding investors with whopping 335 percent returns.
Telsa hopes to continue moving full speed ahead, projecting it will double last year sales to 40,000 vehicles in 2014. It does face some obstacles this year, including mounting R&D costs and expenses tired to its charging station build-out and addition of retail locations and service centers. Another serious challenge comes in the form of competition from deep-pocketed rivals like Ford (F), which produces an electric Focus model and GM, which has two moderately successful plug-in electric vehicles, the Chevrolet Volt and Cadillac ELR. Both giants are heavily investing in research and development to grab Telsa market share.
But the real question may be will the innovative, buzz-generating Tesla be an acquisition target. In December USA Today reported that Veteran industry analyst Yra Harris of Praxis Trading told CNBC in late December that GM could snap up the electric car maker next year, though Tesla CEO, former PayPal billionaire Elon Musk, has said the company will not consider selling before 2016.TESLA Risk State from SmartStops.net
During the pullback in Telsa’s most recent state of elevated risk under the SmartStops conservative signal view, investors saved $40 per share.
Although Telsa’s stock is currently in a normal state of risk, smart investors should take a regular look under the hood and protect their portfolios in this nervous market with exit-triggering stop alerts. (A combination of high valuation and two car fires that stoked safety concerns sent shares reeling in October and November before making a U-turn after the company was cleared of any responsibility in German investigative probe.)
Analysts are at odds about Telsa being overvalued and what that means over the long haul. Despite its sky-high valuation and its continuing need to be at the forefront of innovation to succeed, Tesla has an impressive track record of overcoming obstacles to reach and exceed its goals. And shareholders are banking on its management team’s ability to continually execute its plans using a solid business model, superior products, agile R&D, strategic partnerships and a savvy marketing machine.
Only will tell if this growth stock will end up being a smart long-term bet for investors.