Many analysts looking at the stock of Tesla Inc. (NASDAQ:TSLA) have highlighted the long-term potential upside offered by investing in the "car company of the future" of late. With an amazing brand and an energetic and inspiring CEO, the upstart car company has grown its share price from the $20 level in 2010 to just above $325 this week.
Analysts from Morgan Stanley did a deep dive into how investor sentiment currently looks for Tesla as well as compared to one of its main rivals Ford Motor Company (NYSE:F), to see just how bullish investors are with the Tesla business model compared to the traditional car industry today.
On Friday, these analysts published a note highlighting an interesting divergence among investors with regard to how they see both companies performing moving forward; investors forced to choose between the two auto makers ended up choosing Ford over Tesla 57% of the time.
This result may surprise Tesla investors and brand-lovers, however, the analysts note that one of the main reasons investors may be more likely to choose Ford today over Tesla, irrespective of the fact that Tesla’s bloated market capitalization now exceeds that of Ford’s, is that the upcoming Model 3 release for Tesla is unlikely to be profitable, at least off the bat.
Profitability for Tesla has been elusive, and the recent equity and debt issuances required to build the company’s Gigafactory and other infrastructure supporting its Model 3 production launch are likely to hamper profitability moving forward. The long-term prospects of Tesla are yet to be determined, however it appears much of the smart money in financial markets today is betting on the ability of traditional players to innovate over the early innovators.
