Like many “hot stocks” Tesla has had exuberant rises and devastating falls. It is up over 100% in the past year, but dropped 25% between September and October, according to ETF Daily News. Ron Baron of Baron capital has openly expressed his enthusiasm for the product, the electric car, which is what he thinks everyone will be driving in 25 years. Not only is he bullish on the product, but Tesla’s stock as well. Tesla is a Baron Capital Holding, and Baron likes the fact that CEO Elon Musk emphasizes quality over quantity.
While there are concerns about competition, Baron argues that Tesla has a “first mover” advantage. However, after moving 600% in the last two years, some analysts are concerned the stock is overvalued, particularly since it trades at a multiple of 69, while the average P/E multiple of a stock in the Nasdaq is 19 and of the S&P, around 17.
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Like Baron, other analysts are undeterred in their positive ratings for Tesla. James Albertine of Stifel Nicolaus thinks the stock could rise to $400, nearly double its price when the projection was made. Steve Grasso noted that gross margins went from 17% to 28%, and thinks Tesla has plenty of upside.
