fin501 discussion response

Respond to the following in at least 125 words each using 2 references:

1) Yes, Tesla has made some huge strides going forward but at the same time I am just not sure that everyone else on the market is exactly ready for Tesla. The car provides positive incentives running on electricity as well as possibly even saving the planet, but due to the large amount of competition and its market already losing out $773 million the product may have a short life span. There is already too much competition in its market to compete with, and although thousands of people are still not adapting to solar panels, the same pattern may be seen towards Tesla motors (Wasik, 2017). After looking through both articles, I find that Tesla has very high value and that because it is new and trendy with many different features I think that is why the car is such a major success so far. However, I do feel like there is more work needed to be done as well as far as going up against competition and generating a consistent market of sales. Tesla Motors is still currently looking for ways to evolve and generate more interest from investors and shareholders with their products. According to Mays, Tesla is continuing to make huge strides in production with creating similar products that are just as popular with other competitors and popular vehicles such as Sedans and SUV’s and modeling after that with their own features (2019). If I had the choice of investment between Tesla or GM and Ford, I would honestly choose investing towards Tesla because of all the different features that are gearing up towards the future and despite its profit results I think it could lead to the future of automobiles sooner or later.

2) A few years ago, when these articles were written, there was mixed reaction to Tesla stock. As Harriet Lefton (2019) shows, while there was reason to be excited about the possibilities that the stock could bring, looking at the debt, cash flow issues and competition should have raised red flags over the valuation of this stock. John Wasik (2017) saw the light in his article which touts the innovativeness of the car, but he also states, “when a stock price reflects more wishful thinking than real-life business logic, I have to draw the line.”

Owning a Tesla was once seen as a status symbol (Curran, 2018). It was a promise of clean cars that could change the world (Wasik). Then the company decided to expand with SpaceX, Solar power, phone chargers and even surfboards (Wolfe, 2018). I believe, along the way, Tesla lost its identity.

In an effort to compete with the likes of GM and Ford, Tesla has tried to appeal to the more mainstream market (Wolfe). However, Tesla stock has declined 17% over the past year, 29% since the high in Sept. 2017 (Lahiff, 2019). The stock was priced at $361 in June 2017 but is trading today at $268 (Yahoo finance, 2019). This is partly due to the lukewarm reception of their upcoming crossover, model Y (Lahiff). Other things that have contributed to this decline were the repeated delays in the model 3 as well as extensive news coverage of fires caused by the batteries that operate the car (Isidore, 2018).

I believe that Tesla stock is vastly overpriced. I would have to agree with Michael Bapis from Vios Advisors at Rockefeller Capital Management, who says about Tesla and its stock, “I can’t get comfortable owning it right now. They do not know who they are” (Lahiff). I would prefer to invest in GM stock vs. Tesla.

Stacey

References:

Curran, D. (2018). The ultimate status symbols of the bay area elite. SFGate. Retrieved Mar. 8, 2019 from https://www.sfgate.com/news/article/Status-symbols…

Isidore, C. (2018). Are electric cars more likely to catch fire? CNNMoney. Retrieved Mar. 18, 2019 from https://money.cnn.com/2018/05/17/news/companies/el…

Lahiff, K. (2019). Tesla shares are taking a turn for the worse. CNBC. Retrieved Mar. 18, 2019 from https://www.cnbc.com/2019/03/18/tesla-shares-are-a…

Lefton, H. (2017). 5 reasons to be excited about telsa inc. tsla shares. Smarter Analyst. Retrieved Mar. 18, 2019 from https://www.smarteranalyst.com/bloggers-corner/5-r…

Wasik, J. (2017). 5 reasons why tesla is bubble priced. Forbes. Retrieved Mar. 18, 2019 from https://www.forbes.com/sites/johnwasik/2017/04/14/…

Wolfe, S. (2018). Tesla doesn’t just sell cars – here are surprising ‘lifestyle’ products. Business Insider. Retrieved Mar. 8, 2019 from https://www.businessinsider.com/tesla-lifestyle-pr…

Yahoo Finance. (2019). Tesla, inc. Retrieved Mar. 18, 2019 from https://finance.yahoo.com/quote/TSLA?p=TSLA&.tsrc=…

Original request for post below. DO NOT Submit anything for what is written below. It is for reference ONLY.

Tesla Motors is the “it” stock right now in the automotive industry. Tesla was a pioneer in offering cars that run 100% on electricity rather than gasoline, and it has also diversified into solar energy, purchasing the company SolarCity. Its stock price has risen high enough in recent years that it has surpassed automobile giant General Motors in market valuation.

However, not all analysts believe Tesla is a good investment at its current price. It sells less than a 100,000 cars per year, compared with General Motors which sells around 10 million cars a year. Unlike General Motors, Tesla has yet to earn a profit.

Here are some articles both pro and con about whether you should invest in Tesla. Take a look at these articles and also try to find some more recent articles on Tesla’s stock:

https://www.forbes.com/sites/johnwasik/2017/04/14/5-reasons-why-tesla-is-bubble-priced/#d0626b26c631

https://www.smarteranalyst.com/2017/03/16/5-reasons-excited-tesla-inc-tsla-stock/

Based on what you’ve read, do you think Tesla is worth its high valuation, or is it simply priced too high because it is considered new and trendy? Would you personally invest in Tesla, or would you prefer to invest in one of the more established auto companies such as GM or Ford?

 
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