With shares of Tesla Motors (NASDAQ:TSLA) trading around $90, is TSLA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Tesla Motors designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components. The company also provides services for the development of electric powertrain systems and components, and sells electric powertrain components to other automotive manufacturers. It markets and sells its vehicles through Tesla stores, as well as over the Internet. Consumers and companies are looking to save at the pump, and what better way than with electric vehicles? The aesthetically pleasing vehicles that Tesla Motors is producing are easy on the eyes and the pocket. Look for Tesla Motors to see increasing demand and profits, as consumers and companies opt for its vehicles over traditional ones.
T = Technicals on the Stock Chart are Strong
Tesla Motors stock has seen a consistent uptrend since its initial public offering in 2010. The stock has been exploding higher the last few weeks, which has shot the stock up to all-time high prices. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Tesla Motors is trading above its rising key averages which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
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Taking a look at the implied volatility (red) and implied volatility skew levels of Tesla Motors options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Tesla Motors Options | 72.45% | 50% | 48% |
What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| June Options | Flat | Average |
| July Options | Flat | Average |
As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Increasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Tesla Motors’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Tesla Motors look like, and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | 113.95% | -1.27% | -66.67% | -66.67% |
| Revenue Growth (Y-O-Y) | 1762.78% | 677.88% | -13.13% | -54.19% |
| Earnings Reaction | 24.39% | -8.77% | 8.92% | -2.83% |
Tesla Motors saw increasing earnings and revenue figures over the last quarter. From these figures, the markets are very excited about Tesla Motors’s recent earnings announcement.
P = Excellent Relative Performance Versus Peers and Sector
How has Tesla Motors stock done relative to its peers, General Motors (NYSE:GM), Toyota Motor (NYSE:TM), Ford Motor (NYSE:F), and sector?
| Tesla Motors | General Motors | Toyota Motor | Ford Motor | Sector | |
| Year-to-Date Return | 166.8% | 16.72% | 37.93% | 16.29% | 23.56% |
Tesla Motors has been a relative performance leader, year-to-date.
Conclusion
Tesla Motors offers aesthetically pleasing electric vehicles during a time where consumers and companies are looking to minimize their footprint and ease the impact on their pockets. The stock has seen an explosive move higher over the last few weeks that has taken it to all-time high prices. Earnings and revenue figures grew dramatically in the recent quarter which has really impressed investors. Relative to its peers and sector, Tesla Motors has led, in year-to-date performance, by a wide margin. Look for Tesla Motors to continue to OUTPERFORM.
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