This article was originally published by GuruFocus
By Sarfaraz A. Khan, Research assistant: Gohar Yousuf
March 24, 2014
Tesla Motor (TSLA) is planning to construct the world’s largest battery factory. The company could produce more lithium ion batteries in a year than the total amount of batteries that were produced, around the world, in 2013. Moreover, the company could bring down the lithium ion battery costs by at least 30%, which could give a significant boost to its earnings.
Tesla Motor (TSLA) is planning to construct the world’s largest battery factory. The company could produce more lithium ion batteries in a year than the total amount of batteries that were produced, around the world, in 2013. Moreover, the company could bring down the lithium ion battery costs by at least 30%, which could give a significant boost to its earnings.
The news was
welcomed by investors and Tesla’s shares, which were already trading at lofty
valuation levels, went even higher. In my previous
article for GuruFocus, I mentioned that Tesla is laying foundations for
solid growth in the coming years and therefore investors should not sell their
Tesla shares. Since then, the company’s shares have been up more than 50% and
are currently trading 63 times its 2015 earnings estimates, as per data
compiled by Thomson Reuters. This is expensive even for a technology stock.
Tesla,
however, is a disruptive technology stock. Therefore, its stock will likely
continue to trade at extraordinary multiples of earnings; like 3D Systems
(DDD), or the fuel cell makers
such as Ballard Power (BLDP)
or Plug Power (PLUG),
or Amazon (AMZN).