In a recent post from blogger Sapient Investor, the writer discusses what Tesla (TSLA) has brought to the table and what is in store for the future. While Tesla is the first company to really brand and sell the electric car, it will now begin to have competition as other companies are acquiescing to the pressures of the industry. SI says “we expect Tesla’s expertise in the integration of software and hardware to retain its edge over other players.” (To watch SI’s track record, click here)
Additionally, TSLA maintains a dominant position in terms of charging stations in North America and the company is planning to expand its supercharger network over the next few years throughout North America as well as Europe and Asia. SI predicts other companies that have sprung up and specialize only in electric vehicle charging will be margin dilutive for Tesla.
That being said, the blogger goes through various scenarios for how the company will move forward:
The base-case scenario: Tesla’s risk-reward ration doesn’t appeal to long-term investors based on the current share price.
The most optimistic scenario: Tesla will grow with a much higher pace relative to the industry driven by new revenue streams associated with self-driving technology.
The most pessimistic scenario: Tesla will lag behind the peers in terms of growth. Competitors will do better at manufacturing batteries and collaborate better with software providers while getting a better price for the programs.
Though the blogger presents a case for every realm of possibility, overall the advice to investors is to buy and hang onto the stock.
“Investors should have a very long-term horizon to invest in a company like Tesla. They should not worry about each and every news (tweet) related to Tesla (Elon Musk). They should not get overly bullish by Tesla’s ambitious announcements related to sales targets. At the same time, they should not worry if Tesla misses some of its near-term targets. It is important to have an idea of the larger picture. Even if you believe that Tesla’s business model is not viable and the stock price is overvalued, it may not be prudent to short Tesla. Shorting a stock is usually a very risky strategy as the market can remain irrational for longer than you can stay solvent,” SI said.
The Street is not nearly as positive. TipRanks finds out of 26 analysts, 8 are bullish, 8 are sidelined and 10 are bearish. The consensus rating is Hold, with a price target of $326.91, showing a downside of 9.63%. (See TSLA’s price targets and analyst ratings on TipRanks)