Tesla Motors Inc: 60% Upside For TSLA Stock In 2017?

- January 2, 2017

TSLA Elon MuskTesla Motors Inc (NASDAQ:TSLA) investors have reason to be optimistic after the way 2016 ended for the company, with three stories that TSLA stock owners can be proud of.

First, Tesla blew the competition away in Consumer Reports survey of owner satisfaction. Its 91% rating was far better than second place Porsche’s 84% rating. No other car maker finished in the 80 percentile. The Model S had a 94% satisfaction rating, and Tesla’s Model X was second with an 88%. Once more, no car came close in ratings.

Second, Chinese research firm KGI cited channel checks to conclude that Tesla Motors is ramping production and strengthening automation to ensure the company hits its 2nd-half 2017 production target of 100,000 units of the Model 3. That’s great news given how often Elon Musk has over-promised and under-delivered.

Third, Baird analyst Ben Kallo named TSLA stock his top pick for 2017. Kalo believes 2017 will be full of Tesla stock catalysts, starting with a Gigafactory tour on January 4 and ending with strong demand for Tesla’s Powerwall 2. Kallo believes “Tesla Energy” is not priced into TSLA stock and he figures the company can beat Model 3 expectations.

TSLA stock: Is 2017 a comeback year?

Kallo has an ‘Outperform’ rating on Tesla stock with a price target of $338, which implies upside of nearly 60%. Clearly, Baird and Kallo are very bullish on TSLA stock, and quite frankly, they have reason for optimism.

The Gigafactory is complete. That means a significant ramp in production. Not only is there potential for growth of 50% for Model S and Model X, but Tesla has an order backlog of 400,000 units for the Model 3. Moreover, Kallo is right when he said “Tesla Energy” is essentially ignored. BNL Finance previously concluded that Tesla Energy and the company’s solar roof ambitions could end up being a “game-changer” for TLSA stock.

While this all sounds nice, TSLA stock owners must remember there is a reason that short interest has soared over the last few months. Fact is a Donald Trump Administration creates new risks.

While Trump may care about Tesla, he is far more worried about the millions of cars and 400,000 combined employees that General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) produce. That’s why we also concluded after Trump’s victory that TSLA stock could eventually see three-quarters of its value wiped away.

The bottom line is that despite these three “big wins” to end the year, even if Tesla Motors meets lavish expectations for 2017, GM is still 15x larger by revenue. This is an important observation because the two companies are most certainly in the same conversation when it comes to valuation. And if Kallo is right, TSLA stock would be more valuable than GM or Ford. That’s just ridiculous.

Therefore, Ford and GM stock are either two of the greatest values of the year, or TSLA stock is a complete value trap. Fact is both are probably true. Hence, even with positive developments to end the year, TSLA stock owners must conclude that all positives are baked into Tesla stock. As a result, the only investors who should own TSLA stock are those who plan to buy, hold, and forget for the next decade or more. Anyone else is asking for loss.

 

 

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