Tesla Motors Sues Atlas Technologies - Analyst Blog

Tesla Motors Inc. ( TSLA ) sued machinery maker Atlas Technologies Inc. regarding an arbitration agreement. In a July 16 filing with Delaware Chancery Court, the electric carmaker revealed that Atlas executives are refusing to honor an agreement to "arbitrate a contractual dispute".

Atlas Technologies is a unit of Productivity Technologies Corp. and is based in Fenton, Mich. It manufactures equipment used in the car-production process

TSLA more than tripled this year. The stock recorded an all-time high of $133.26 on Jul 15, the day it debuted in NASDAQ-100, but started falling, witnessing its biggest one-day drop of 14.3% to $109.05 on Jul 16 since Jan 2012 due to a bearish report by Goldman Sachs ( GS ) on the stock. However, the stock started escalating again, rising 9.7% last Friday since Jul 16.

The turnaround gain of TSLA was attributable to optimism raised by some brokerage firms about the automotive industry in the U.S. as well as about the company being a leading electric vehicle maker. Moreover, Fed chairman Ben Bernanke's recent announcement of continuing with the stimulus policies raised optimism among the investors.

Tesla Motors CEO, CTO and co-founder Elon Musk, who is also the co-founder of electronic payments system PayPal and CEO of rocket ships and spacecraft builder company SpaceX, surprised investors in its tweeter comments on Jul 15 by revealing its dream of building a hyperloop rapid transit system in the future. Musk has been talking about this "fifth mode of transportation" alongside trains, planes, cars and boats for almost a year.

Tesla Motors, named after the renowned physicist and inventor Nikola Tesla, 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. 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.

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 and General Motors ' ( GM ) Volt. However, Tesla's innovative ideas about making electric cars much more affordable and driver-friendly give it a competitive edge over rival automakers.

The revelations of Tesla's innovative ideas and mounting stock price pose a threat to prominent automaker such as General Motors. Recently, the Detroit automaker revealed that it has assigned a team to study the challenges faced from the California-based automaker in electric vehicle technology. Tesla's success spotted the failures of a big automaker like GM in advancement of electric car technology.

Currently, shares of Tesla retain a Zacks Rank #1, which implies a short-term (one to three months) rating of Strong Buy.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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