For the first nine months the year, shares in electric carmaker Tesla soared 471%. Yet since its peak at the end of September, Tesla's stock has fallen 28%. Part of that drop had to do with a series of reported fires involving Teslas and George Clooney trashing the car in an Esquire interview.
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With shares are still up 305% for the year, even CEO Elon Musk notes that the company's valuation reflects a market expecting nearly-flawless performance as a business. Speaking at the DealBook Conference on Tuesday, Tesla's founder said:
"I actually think that the high stock was somewhat distracting. And, in fact, I went on record as saying that I though the price was higher than we had any right to deserve. Now, I mean, that said, I do think long-term that the price will be – or that the value of the company will be – well in excess of that. But, to give us that valuation now is to have a lot of faith in our future execution."
In other words, Tesla's stock shot up to a point that the market demanded its perfection. Its recent decline may be the market having second thoughts for now.
So, while Tesla was the automaker everyone was talking about in 2013, which one will be the carmaker of 2014?
The two biggest publicly traded US auto companies are General Motors and Ford. And, while their returns haven't been as breathtaking as Tesla since the start of 2013, they're both outpacing the S&P 500 this year; GM is up 33% while Ford is up 32%.
CNBC contributor Zacahary Karabell, president of River Twice Research, has one pick in the auto industry – but with one caveat: he's generally not a fan of the industry.
"I don't particularly love automakers as an investment relative to other investments," says Karabell. "But, I do think Ford has been a leader in innovation for an industry that has not led in innovation, at least for the past 20 or so years."
Karabell cites Ford's application of new technologies, automation, fuel efficiency, and design as its strength. "I think they're a more nimble company that's exhibited a lot more innovation and leadership," says Karabell. And, it's one of the reasons why their CEO (Alan Mulally) is in the running to be Microsoft's CEO, because he really turned around the company."
Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, doesn't agree with Karabell. To Ross, Ford's recent stock chart looks a lot like GM's stock chart. But, while Ford's breakout above a key resistance level failed to hold, GM's current breakout looks to be holding.
"Right now, you want to go with the momentum," says Ross. "Be a better buyer of GM and a better seller of Ford."
Which is correct, Karabell on the fundamentals or Ross on the technicals? Watch the video above to see both sides.
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