Invast Blog

Tesla Crystalises Valuation, Changing the World

US auto giant Tesla Motors is raising more than half a billion dollars from investors at a healthy US$242 per share. Demand has been strong for the stock forcing the company to upsize its capital raising. We first introduced Tesla to Invast clients last year and the stock is available for traders on our DMA CFD platform. Tesla is seen as a car manufacturer by some. We see it as an innovator of energy.

A few years ago, many analysts and so called experts where writing about the unjustified valuation of the stock when it reached above US$100 per share. Its market capitalisation moved into the tens of billions of dollars and many were calling it the top. Yet Tesla focused on delivering on promises, it opened up its technology and research/development to the public and pushed hard on delivering more cars to the public.

I was fortunate to be invited by Tesla to test drive the Model S when it launched in Australia last year. It was the most interesting and exciting car that I have ever driven and hard to believe that it was all powered by an electronic motor. The Model S was the start of a journey, a journey which has seen Tesla move into expanding the use of solar power and expanding the ability of battery cells to capture energy.

Tesla’s raise is no doubt the function of having growth ambitions beyond capital requirements. We usually wouldn’t support or look favorably on companies who raise so much capital when they aren’t making a profit. Keep in mind that Tesla Motors is generating healthy revenue but still not generating a reasonable net profit amount. We’re making an exception in this case though because of one simple reason – track record.

What Tesla has managed to achieve to date, in such a very short period of time, is absolutely amazing. It has completely revolutionised the car industry and many incumbents who had previously written off the merits of electric cars are now actually working with Tesla to develop their own technology. Track record means a lot and we think Tesla will continue to change the world, perhaps at a pace of growth much greater than what we have experienced in the past few years.

Tesla is a crucial member of the driverless car investment strategy which we are currently working on and likely to launch on Invast’s PortfolioSelect platform in the coming months. If the recent capital raising provides any short term stock price weakness, we would see it as a great entry point on a medium term horizon. There aren’t too many companies looking to change the world on the scale that Tesla has, in such a very short period of time.

Exclusive Chinese Market Insights
We remain cautious on the Australian banks, particularly ANZ and its expansion into Asia. A kindly reminder that I will be in Guangzhou during September, meeting some of the most prominent Chinese investors and investment firms. During this time, I will be writing several exclusive blog posts for Invast clients. If you want these insights, make sure you sign up to the full range of research that Invast clients enjoy. This blog post is just a small part of the full research range.

Upcoming Online Event (Webinar) I will be presenting on the Australian Banks this month, make sure you get in early and register for the upcoming webinar by clicking here.

PreviousOnline Event (Webinar)
Make sure you catch our webinar held lastmonth. I presented a theme titled “Property vs. Shares – Where to invest in the new financial year” It’s something that I’m asked very regularly so we wentthrough the facts, the data and allowed the attendees make up their own mind. If you missed the webinar, I suggest you get in touch with the Invast team to secure a record of the presentation.

These are our initial impressions only, for further details please do not hesitate to get in touch with the Invast team.

Peter Esho
Chief Market Analyst
Invast Financial Services

Leave a Reply