TSLA (we're short) popped 9.15% yesterday based on an upgrade by Jefferies with a price target of $130, sending the stock to $117.18 for the day and the shorts are probably not done being squeezed. Analyst Elaine Kwei's logic is based on the fact that TSLA is a luxury car that is out-competing BMW, Mercedes, Audi and Porsche, accounting for all of the luxury car market's sales growth this year.
Based on reported sales this calendar year and customer VIN numbers, "we believe there is likely upside to prior 2Q guidance for deliveries of 4,500 units, as well as 2013 guidance of 21,000 units," Kwei said in her research note. "We estimate TSLA has taken 9% market share in the U.S. full-size luxury sedan market, accounting for nearly all growth in the segment. We increase our estimates and PT (price target) to $130 based on a 10-year DCF (discounted cash flow) and update our EV market forecast."
That sounds great – to people who have no concept of math! TSLA may sell more than 21,000 cars in 2013? Let's see, even if they sold an average car for $80,000 and sold (let's go crazy) 25,000 of them – that's $2Bn. Now, let's keep the insanity flowing and assume they make double the industry average of 5% and rake in $200M in profits on those sales.
$200M is a nice amount of money. Even a multi-Billionaire like Elon Musk is happy to have an extra $200M but TSLA Motors, Inc has floated 115M shares of stock so $200M, unfortunately, only works out to $1.74 per share and that means, if you buy TSLA stock for the current price of $117, it will take them 67 years to make your money back.
If they DOUBLE their business (from our super-rosey outlook) to 50,000 cars in two years (ignoring the fact that it's taken them 10 years to get to 21,000 cars) and then they double it again to 100,000 cars in two more years – now it's 2018 and we're assuming that everything went perfectly and they're still getting $80,000 per car (essentially the ENTIRE current luxury car market) and they are still making double the industry-standard margins and it STILL will take you 17 more years (2035) to get your $117 per share back!
On the above…
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