Tesla Motors (NASDAQ:TSLA)’s Stock will Grow Indefinitely

Investors are betting that Tesla Motors (NASDAQ:TSLA) is in for a long term play. Currently, the stock is trading at $243, and is rising up to $291, its all-time high record, rapidly. It depends on whether the company considers short-term execution as more important or long-term potential. This will determine the fate of Tesla Motors (NASDAQ:TSLA)’s stock.

Tesla Motors (NASDAQ:TSLA) released its third-quarter earnings report on Wednesday. According to the report, the sales were below expectations and production was delayed. The next year’s SUV model, Model X, will be rolled out later than planned as well. The CEO, Elon Musk, also said that Tesla Motors (NASDAQ:TSLA) has the potential to grow 50 percent every year even if it does not introduce the new SUV models.

James Albertine, an analyst of Stifel Nicolaus, is of the view that Tesla Motors (NASDAQ:TSLA)’s stock is worth $400 per share. Meanwhile, Brian Johnson of Barclays’ argues that Tesla Motors (NASDAQ:TSLA)’s stock is overvalued and its actual worth is $220. What explains these extremely different conclusions? It depends on which part of the earnings report you emphasize. If you are looking at the negatives, then you will say Tesla Motors (NASDAQ:TSLA) stock is overrated.

However, at the end of the day, all analysts agree that someday, Tesla Motors (NASDAQ:TSLA) will be worth more than it is now. The argument among investors and analysts is about the difficulty or ease of the path that gets Tesla Motors (NASDAQ:TSLA) to that elevated position.

An analyst from Ascendiant Capital Markets said that the bumps on the road to success do not matter since there is no competition on the way. The luxury auto-makers are nowhere near Tesla Motors (NASDAQ:TSLA) in making long-range, electric automobiles. These luxury carmakers are actually posing competition for companies like BMW, Jaguar, Porsche and Audi, who can’t even figure out how to solve this problem. The analyst, Theodore O’Neill, also said that if Tesla Motors (NASDAQ:TSLA) delays launch of the new models just to make sure that the competition does not have opportunity to swoop in, then that is actually a safe and wise bet. The customers are not running away.

The optimists are glad with Elon Musk’s claims that the company can manage to sell 50,000 cars of the Model S in the next year. If Tesla Motors (NASDAQ:TSLA) does manage to grow at 50% annually, then by 2018, it will have crossed $16 billion in sales alone. This estimate is for before sales of Model X. The Model X will cost around $0.1 million.

Analyst Ben Kallo said that the biggest argument for Tesla Motors (NASDAQ:TSLA) has been the demand argument, which they have fully satisfied. The financial profile of Tesla Motors (NASDAQ:TSLA) is different from those of other car manufacturers.

In the third quarter, the gross margins of the company were 29%. This is twice as high as Ford’s, even if you don’t consider the scale benefits that Tesla Motors (NASDAQ:TSLA) has begun to realize. The company’s battery factory also cost less than other companies’.