Back on November 11th, 2010, shares of Tesla Motors soared to $29.36, leading JPMorgan Chase analyst Himanshu Patel to say, "we are bullish on Tesla Motors as we believe it is at the vanguard of improving battery costs/durability." However, Motley Fool's Travis Hoium disagreed with Patel's assessment of Tesla, claiming that optimism pumped up TSLA's prices and predicted that a fall out was looming.
Apparently, Hoium is not alone in forecasting that an investment in Tesla could be risky. Seeking Alpha (SA) has tagged TSLA with a pass-hold, claiming that Tesla has two obstacles to address before deeming that an investment in the automaker will pay off. SA states that Tesla's "dangerous dependence on lithium" – a rare earth metal some (but not all) say is in limited supply – potentially positions the automaker to be driven out of the industry if lithium prices skyrocketing.
Furthermore, SA claims that the "cut throat competition" in the electric vehicle segment will have Tesla duking it out with the likes of Nissan, Ford, Toyota and other automakers for a chunk of the plug-in vehicle market. SA states that "going head on against auto companies is a high stakes game where it's a simple do or die scenario."
SA believes that it's best to pass on TSLA at this time, but concludes with this bit of advice:
And here, once again, is our obvious disclaimer: AutoblogGreen is an automotive site, not a financial one. The views and opinions expressed above are those of Seeking Alpha. You can express your own in the comments below.If the firm does manage to succeed in the electric car space we have little doubt the stock will likely skyrocket over the long term and allow for ample opportunity to get in down the line when it has proved itself as a financially viable firm.
[Source: Seeking Alpha]