Tesla Motors is the “it” stock right now in the automotive industry. Tesla was a

Question

Tesla Motors is the “it” stock right now in the automotive industry. Tesla was a pioneer in offering cars that run 100% on electricity rather than gasoline, and it has also diversified into solar energy, purchasing the company SolarCity. Its stock price has risen high enough in recent years that it has surpassed automobile giant General Motors in market valuation.

However, not all analysts believe Tesla is a good investment at its current price. It sells less than a 100,000 cars per year, compared with General Motors which sells around 10 million cars a year. Unlike General Motors, Tesla has yet to earn a profit.

Here are some articles both pro and con about whether you should invest in Tesla. Take a look at these articles and also try to find some more recent articles on Tesla’s stock:

https://www.forbes.com/sites/johnwasik/2017/04/14/5-reasons-why-tesla-is-bubble-priced/#d0626b26c631

https://www.smarteranalyst.com/2017/03/16/5-reasons-excited-tesla-inc-tsla-stock/

Based on what you’ve read, do you think Tesla is worth its high valuation, or is it simply priced too high because it is considered new and trendy? Would you personally invest in Tesla, or would you prefer to invest in one of the more established auto companies such as GM or Ford?

Explanation / Answer

In my openion, i am not willing to fascinated by the stock trend of Tesla and I would lean toward investing in GM or Ford before I looked at Tesla. I feel that the stock is over inflated based on the fact that its innovation is heavily dependent on its CEO and the deep pockets of its competitors like GM could very well come up with a similar car cheaper in price, manufactured quicker and readily available. There is also a concern of negetive cash flows that the company is genetating which raises the question that how the company is going to survive in long run if it is spending way more than what it is earning.

In my view, self-driving ecofriendly cars' sales will not pick up until they are cheap and within the budget of normal people. So i think Tesla is a risky compnay to invest in right now because of the above mentioned fators and i will certainly not invest as of now. It is better to earn less than putting your money into waste.

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