Tesla is speeding higher.
The stock climbed 10% on Thursday after beating quarterly profit and sales estimates by a mile.
Three experts weigh in on what they're watching now.
Tasha Keeney, analyst at ARK Invest, delved into how Tesla is in a league of its own compared with other auto companies.
"The auto gross margin was higher than most expected. I saw estimates in the sort of early 20s range — it's at 24%. I think that goes to sort of prove our thesis. … The way that we've modeled battery cost declines, Tesla's costs should continue to come down while traditional gas-powered vehicles are just becoming more expensive to produce. And this is what's really going to drive the inflection with electric vehicles, we think that they'll be at price parity with gas-powered cars by the early 2020s."
Jed Dorsheimer, managing director at Canaccord Genuity, said certain challenges could pressure Tesla's valuations.
"We got all of the questions on profitability as well as demand answered. I think the risk factor on a go forward — and hopefully Tesla will be able to address this — is what is the virus going to do with respect to Chinese demand? Is the Shanghai facility clearly a big component of the growth story going forward? So, I think right now we're just going to need to see more information in terms of constantly evaluating. I would say that one of the challenges, and I think the problems with taking a traditional metric approach to a company that's far out in the lead of a new space, often we get into these situations where valuation metrics are maybe not applicable in the same way they are to a GM or a Ford. So, I do think we need to look at this stock differently."
Joe Osha, semiconductor analyst at JMP Securities, questions the right multiple value for Tesla.
"For this year we had them at above 500,000 units. I think they're making tremendous progress in terms of the manufacturing ramp and the market share that they're gaining. My question is really more to do with what you want to pay for. Even on our numbers, which I think is where the Street is going to be coming to after today, you're paying a mid-20s EBITDA multiple. I'm not sure if I can get comfortable with that but all credit is due to the company. They've done amazingly well. I guess the question would be, do we value it like GM or do we value it like Facebook. We're not talking about a 10 EBITDA multiple. We're talking about 25. So, I do agree that comparing this company to General Motors doesn't make sense. The question is, what is the right multiple?
