Tesla Motors Attains 52-Week High - Analyst Blog

By Zacks | July 02, 2013 AAA

Shares of Tesla Motors Inc. (TSLA) hit a new 52-week high of $117.77 on Jul 1, which is above its previous level of $114.90 on May 29, and closed at $117.18 on the same date. The closing price represented a whopping one-year return of nearly 275.0% and year-to-date return of 231.4%.

The Palo Alto, California-based leading manufacturer of electric vehicles and electric vehicle powertrain components has a market cap of $12.7 billion. Average volume of shares traded over the last three months stood at approximately 9,198.1K.

Shares of TSLA started escalating at a fast pace following the release of its surprising 2013-first quarter results on May 8. The company posted its first-ever quarterly profit of $15.4 million, or 12 cents per share, on an adjusted basis, in the first quarter of 2013 compared with a loss of $79.3 million or 76 cents in the corresponding quarter of 2012. This indicated a whopping positive earnings surprise of 271.4%, given the Zacks Consensus Estimate of a loss of 7 cents for the quarter.

Revenues jumped manifold to $561.8 million from $30.2 million in the first quarter of 2012. Thanks to the impressive 5,000 units of Model S electric car sales during the quarter.

In May, TSLA also paid off the remaining $465 million U.S. Department of Energy (DOE) loan much earlier than expected. The electric carmaker received the loan in Jan 2010 and agreed on a 10-year repayment program. However, the company repaid the full outstanding amount of the loan in the second installment itself.

Last December, Tesla made its first DOE loan repayment of nearly $13 million. On May 22, the company paid off the remaining $451.8 million using the near-$1 billion proceeds from the common stock and convertible senior note offering made last week.

In May, Tesla also came up with a surprise announcement of adding more supercharging stations across the U.S. that are 10 times faster than the ordinary public charging stations, which could boost demand for its electric cars. TSLA plans to increase the number of charging stations threefold from 9 to 27 by the end of next month, which could further rise to 100 by the end of next year.

By 2014, Tesla plans to install charging stations within reach of 80% of people in the U.S. and Canada, and 98% by 2015. With this, the company intends to provide supercharging stations every 80 to 100 miles.

Electric cars have always been criticized for limited driving range leading to their weak demand. This led to limited sales of vehicles such as Nissan Motor’s (NSANY) Leaf, General Motors’ (GM) Volt and Toyota Motor’s (TM) plug-in Prius. However, Tesla’s breakthrough plan of adding more charging stations would surely give it a competitive edge over rival automakers.

Currently, shares of Tesla retain a Zacks Rank #3, which implies a short-term (one to three months) Hold rating.

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