Tesla Motors Inc (NASDAQ:TSLA) has surged ahead significantly in 2014. Their share prices increased by 70% from the beginning of this year. Many analysts raised flag on this huge growth and were skeptical on the Tesla stock. Meanwhile, another analyst’s comments on Tesla stock was published in a Market Watch blog post.
The analyst who goes by the name Achilles Research said that the Tesla Motors Inc (NASDAQ:TSLA) stock is overpriced and bet on the decline of the company’s stock. Tesla stock is currently trading at #256 per share. Tesla stock witnessed a steep fall a couple of times in 2014, with the stock price reaching as low as $116 once. But both times, the stock gained immediate momentum upwards, which many believed was due to the brilliant execution of the electric car and battery businesses by the company’s CEO, Elon Musk.
Tesla Motors Inc (NASDAQ:TSLA)’s Q2 results were a mixed bag with a reported loss of $62 million and on the other hand the company delivered 7,579 Model S vehicles, which kept them on track for the 2014 target of 35,000 cars. People like Achilles points to these data as ‘indefensible valuations’. He pointed out that the Tesla’s free cash flow took a nose dive and reached $177 million, which was around $7 million a year ago.
“What we see with Tesla in the marketplace is a prime example of herding behavior and investors speculating on further short-term momentum. However, this seems to be an inherently unstable situation. […] Tesla’s valuation has certainly run way ahead of its fundamentals even after considering second quarter 2014 results, which were (wrongfully) cheered by investors,” Achilles was quoted as writing on ‘Seeking Alpha’ website.
Some investors, including Achilles agree that Tesla Motors Inc (NASDAQ:TSLA) might be the ‘short of the decade’. Many are not buying this idea though. Wall Street analysts aren’t buying these ideas and keep bumping up the price target on Tesla. Around 50% of Wall Street analysts have ‘Buy’ rating for Tesla stock, which was around 31% in April.
One of Tesla Motors Inc (NASDAQ:TSLA)’s shareholders is Andor Capital Management, led by Daniel Benton. The hedge fund holds around 1.25 million shares of the company.