

Throw This Stock Away: TSLA - gcheong
http://www.fool.com/investing/general/2010/06/30/throw-this-stock-away.aspx?source=ihpsitota0000001&lidx=8

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mkramlich
sell Tesla and buy Apple: wow, it's almost as if he's front-running. :)

why do I say that (only half in jest)? because i bet Tesla has more room for
growth than Apple in the future. my bet on Apple is that in the short-term
it's going to continue to get better but in the longer term it will decline,
if only because of Jobs age and health issues. I admire the guy but I think
he's closer to the end of his career than the beginning, and Apple stocks are
currently very very expensive whereas Tesla is stilly relative cheap in
comparison. If Jobs leaves, and especially if just a few more people near the
top leave, and the top of the company becomes more
mediocre/tasteless/corporate-crapitude like Microsoft then I think it will
flow downhill from there and they'll lose their "premium"/talent edge over
Microsoft.

Of course, none of us can predict the future, but that's how I'm betting.

~~~
laserhase
Funny thing about Motley Fool and Apple.

In 2005, I took Motley Fool's advice and sold my Apple stock. Their argument
then was that the company had nowhere to go because the Windows PC market was
too entrenched, especially with businesses. Maybe they could sell a few more
iPods or something, but no real big growth potential. I had gotten about 50%
growth to show for my investment, so I cashed out while I was ahead. 30-some
bucks a share.

I wish I could find the article, but it's ancient by internet standards, and
probably buried by a couple of CMS migrations. My experience is only one data
point, but oh wow were they wrong on that one.

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Tichy
"Consumers paid as much as $599 for the first iPhones three years ago. They're
paying a third as much for superior devices now."

Investment advisers who can't do the simple maths required for deciphering
mobile pricing schemes? Next...

~~~
jrockway
_Investment advisers who can't do the simple maths required for deciphering
mobile pricing schemes? Next..._

Keep in mind that these are the same people that gave the subprime CDOs AAA
ratings.

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jrockway
I kind of agree with his F recommendation. They have nowhere to go but up,
after all.

I was recently looking at my own company's stock price, and considering
whether to buy it. 3 years ago, the share price was about $60. Then the
finance problem came along, and now it's $15 (up from $4). I don't think it
has anywhere to go but up to its original value; after all, the company is
bigger and stronger now. And, 1000 shares is actually affordable, and would
give me the opportunity to make something like $50,000 if the company
recovers. It almost feels like I'm working at a startup, except one that has
billions of dollars in capital.

If only we could get some IKEA furniture :)

~~~
aresant
Sorry if I'm missing the obvious but what company do u work for? I'll put 1k
on that bet!

~~~
jrockway
If I name the company, it makes the post sound like "investment advice" rather
than "random thought going through my head".

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jeff18
It seems like the only meat of the article is the following:

> I think there are economies of scale that will fail to materialize for a
> company targeting to move 20,000 of its sedans annually in a couple of
> years. Drivers who may be drawn to the novelty may begin to fret over
> service and parts.

That is a neat opinion, but it would be more interesting to explain in detail
why he believes this. Is there any evidence that this is not possible or is it
just a gut feeling without any due diligence? Basically, I think Toyota's
massive investment in TSLA carries a little more weight than this article and
I'd like to see some actual research before "throwing it away".

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mcknz
The Motley Fool is itself a contrary indicator. The real question is should
anyone be buying equities right now....

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ccarpenterg
_Yes, Tesla is cool, but it's also likely several years away from
profitability_

I think an investment advice without a timeframe is not good advice. So for
someone who is expecting a capital gain in 10 years from now this is not the
best advice.

 _I'm all for buying into Tesla when it's at least closer to proving itself_

This contradicts two rules of stock markets: (1) Buy the rumor, sell the news
and (2) Buy cheap, sell expensive.

~~~
jakarta
Does it? How exactly do you determine Tesla is cheap (or expensive)?

The business is set to lose $120M this year and according to the prospectus
for the stock that I'm flipping through - they are basically betting their
future on the $60K model working out.

I'm not saying Tesla isn't a buy, but what I am saying is that the company is
next to impossible to value. So when the author says it is good to wait till
the company has proven itself a bit - I think he means when we can get an
inkling of what kind of money they will earn which is probably after the $60K
model comes out.

Being able to value what you're buying is what gets you from speculating to
investing.

~~~
ccarpenterg
A long bet is not speculation. Nobody knows whether Tesla is going to fail or
not. But since it's an IPO you can 'bet' that is the best price to buy in the
long term.

And for me speculation is buying BP's stock.

~~~
jakarta
Betting is speculating. "Speculation is a financial action that does not
promise safety of the initial investment along with the return on the
principal sum."

And I agree - speculating is buying BP stock. David Barse of Third Avenue even
said so the other day on Bloomberg. Third Avenue's ethos is to invest in
companies that are "safe and cheap."

Tesla is similar to BP in that you don't really have any indication of what
the future will be like. In BP's case it is because nobody knows the future
costs associated with the spill and how that will affect their earnings. With
Tesla, the company has such a limited operating history with no history of
profits that its future.

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smakz
Setting aside fool.com's slide into arbitrary pop-wall street drivel on the
level of Jim Cramer, my main concern about investing in Tesla at this point is
the competition. Nissan is going to have it's Leaf all electric vehicle out
very soon, and not far behind is the Chevy Volt - both vehicles
_significantly_ under cut the Model S in price and will be on the market
sooner.

They had an OK if under whelming run with the Tesla Roadster, and I applaud
Elon Musk for beating the majors to market with an all electric highway going
car - but to bet the company on a luxury electric vehicle is very very
dangerous. Something to consider is the recent cool response that Lexus' 200h
received compared to the Prius.

I will be watching from the side lines on Tesla whether they sink or swim. If
people interested in the electric and alternative fuel vehicle sector, I'd
recommend looking into Cummins Inc (CMI) - a company which is actually making
good money in this sector, growing nicely - and may be off your radar.

------
abyssknight
I bought a few shares of Tesla, not really to make money, more so to support
the company and get in on the first U.S. car maker IPO since Ford in 1956.
I've never traded before, and really had no urge to, but this was
_interesting_ and I had $100 to burn on a gamble.

I bought at $18.50ish. The following day there was a high of $30. Of course,
today, it's back down to about $21, but for that brief moment you could have
made a bunch of money. Which explains the dip today.

Personally, I like Tesla as a company and I think any investment in their
company should be seen as a gamble, but a long one. This is a car company,
something that has to be built and proven, not a stock that will spike due to
new iPhones or what not.

If you're going to buy Apple, wait for the lull. We're still on iPhone 4
volatility at the moment.

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fuzzmeister
"Drivers who may be drawn to the novelty may begin to fret over service and
parts."

While Tesla certainly needs to build our a service and parts infrastructure,
this will likely be far less challenging than with a normal car. This is
because the vastly simplified nature of electric motors as compared to
internal combustion, to wit:

"The typical four-cylinder engine of a conventional car comprises over a
hundred moving parts. By comparison, the motor of the Tesla Roadster has just
one: the rotor."

Such simplicity should, in theory, lead to less frequent, less expensive, and
less parts-intensive maintenance.

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pchristensen
I guess there's a 90% chance he's right (Tesla is overpriced) and a 10% chance
Tesla will be worth 50x in a few years. But I don't have the funds to act on
that assumption.

~~~
chegra
hmm. 0.10x50x$23 = $115

Given those probabilities it seem like a good investment. Or for the less
risky version, dollar cost averaging.

You use something like share builder: Every month invest $100.

1month - $100 price of stock 25.0 Stock own:- 4

2month - $200 price of stock 20.0 Stock own:- 9

3month - $300 price of stock 20.0 Stock own:- 14

4month - $400 price of stock 10.0 Stock own:- 24

5month - $500 price of stock 10.0 Stock own:- 34

6month - $600 price of stock 5.0 Stock own:- 54

7month - $700 price of stock 5.0 stock own:- 74

8month - $800 price of stock 5.0 stock own:- 94

9month - $900 price of stock 10.0 stock own:- 104

10month -$1000 price of stock 20.0 stock own:- 109

Overall value of stock own is 109*20 = 2180. Profit:= $2180-$1000 = $1180

This is an exaggerated example and I only have knowledge of dollar cost
average in theory, so anybody have real world experience, jump into the
conversation.

<http://en.wikipedia.org/wiki/Dollar_cost_averaging>

~~~
mcknz
Dollar cost averaging to zero is still zero. Best to stay away from hot IPO
stocks until they have a history of earnings.

~~~
chegra
hmm...Risk a $1000 that can degrade to $0 or go to $50,000. The bottom is
capped at $0, you cant do no worst, limited downside and unlimited upside. I
think it's worth some disposable income.

~~~
jmm
Um... that's true of buying any stock, right? So I'm not sure the logic allows
you to make any kind of comparative decision.

~~~
zackattack
Not quite. Most stocks don't have 50x potential. (I'm not saying that Tesla
does.)

