Tesla Stock Analysis – Buy or Not?

Tesla Stock Analysis (TSLA)

Today, I want to share my Tesla Stock Analysis.I have been hearing plenty about this new generation of electric cars from Tesla and they look really good. And I feel perhaps it’s time to cover something “sexy.” As usual, I intend to keep my analysis simple and straight forward so that any layman can understand why Tesla Motors might be a good (or bad company) to invest in. Here’s the coverage on Tesla Motors…

Enjoy and remember to leave a comment or question. I am always happy to answer or hear from you.

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Tesla Stock Analysis – Business Snapshot

Tesla Stock Analysis Business Snapshot
Tesla Stock Analysis – Business Snapshot

If you have followed my previous stock analysis, you probably have a good idea that I am not a big fan of technology stocks. And yeah… I am not a big fan of technology stocks. However, Tesla has gain so much popularity that it is hard not to at least take a look at it. Founded in 2003, Tesla focus on creating the new generation automobile and it’s done with using gasoline… all running on electricity. This company has the potential to change the world and that’s what investors got investors excited about the potential of this company.

Getting all excited about potential and the future is not something smart investors do… but to know this, we got to dive deeper into their financials… So here we go…


Tesla Stock Analysis – Earnings Per Share

Firstly, let’s take a look at Tesla financial and let’s start by putting it through our 1st filter which is on the Earnings per share.

Tesla Stock Analysis - Earnings Per Share Chart
Tesla Stock Analysis – Earnings Per Share Chart

As expected with game changers, they typically have potential but their earnings are usually erratic and Tesla is the same. Looking at their EPS chart alone is enough to turn off smart investors.  At this point, I have to say that Tesla Motor is not the type of company we want to get involved with as investors or even traders.


Tesla Stock Analysis – Debt Equity Ratio

Tesla Stock Analysis - Debt Equity Ratio Chart
Tesla Stock Analysis – Debt Equity Ratio Chart

D/E ratio of less than 0.50 is my next filter and Tesla has confirmed further that it does not qualify to be even in our watch list. Gearing might be a little too high for Tesla, a company with negative earnings and with high debt ratio… this is a vulnerable combination and it’s best to stay clear investing in Tesla. No don’t even trade this stock. It’s extremely high risk.


Tesla Stock Analysis – Return on Equity

Tesla Stock Analysis - Return on Equity Chart
Tesla Stock Analysis – Return on Equity Chart

-88% ROE vs our requirement of +25% ROE… this is not looking good for a company that’s full of potential and for a company whose stock price has performed so well in the past 3 years. For your own financial health, please stay clear of Tesla Motors.


Tesla Stock Analysis – Operating Cash Flow

Tesla Stock Analysis - Operating Cash Flow ChartTesla Stock Analysis – Operating Cash Flow Chart

At negative $524.50 Million in cash flow, I am extremely worried for anyone who has gambled on Tesla. Yes, this is a gamble. Tesla might take off and become very big in future, it’s a gamble at this moment.


Tesla Stock Analysis – Valuation

Tesla Motors reminds me of many of those great potential dot com companies of the late 1990s. Great ideas and some with great products but investing into those companies is not a good idea. I would say it’s better to perhaps purchase a Tesla car because it’s cool and beautiful. But to invest into this company, that’s something else. If you want to put money into Tesla Motors, then the below looks like a good buy.

Tesla Stock Analysis - Buy this Car InsteadTesla Stock Analysis – Buy This Good Looking Tesla Instead!

As for Tesla Stocks, it’s currently sitting at an incredible price of $254 with no real business fundamentals to support. This price is only supported by hope, hype, and excitement. I say this again… buy the car. Please don’t invest or trade this stock. Extremely high risk.

Remember, you ultimately are the captain of your own ship. Decide well.

Good luck!

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