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Will Tesla Stock Find Another Gear Amidst Market Sell-Off?

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In the recent market sell-off, many of the top tech operators have been hit hard, such as Facebook (NASDAQ: FB ), Salesforce.com (NYSE: CRM ), Apple (NASDAQ: AAPL ) and Amazon.com (NASDAQ: AMZN ).

But there has been one stock that has been mostly unscathed: Tesla (NASDAQ: TSLA ). Since early October, Tesla stock has actually gone up - from $310 to $347 a share.

Now, of course, the year has seen wild swings. Note that TSLA stock got as low as $250 twice this year.

Then again, CEO Elon Musk has been the source of lots of drama! Here are just some examples of his antics:

  • In August, he noted on Twitter (NYSE: TWTR ) that he had secured funding to take Tesla private. But it turned out to me more shenanigans then reality and the Securities and Exchange Commission (SEC) wasted little time in taking action. The agency got $20 million from Musk and Tesla. Musk also agreed to step down as chairman of the board, as well as bring on two independent board members.
  • On "The Joe Rogan Experience," Musk gave a far-reaching interview - one that lasted two hours. It also appeared he was smoking weed.
  • Musk called one of the rescuers of the Thai football team - which was trapped in a cave - a "pedo." Yes, that resulted in a lawsuit.

For any other company, such incidents would probably be enough to force the CEO to resign. But Musk is definitely critical for the success of Tesla stock. He has the rare combination of technical capability, marketing prowess and strategic thinking. Let's face it, no one has been able to start a car company and a space company.

Here's what famed astrophysicist Neil deGrasse Tyson has said : "As important as Steve Jobs was, no doubt about it - [and] you have to add him to Bill Gates, because they birthed the personal computing revolution kind of together - here's the difference: Elon Musk is trying to invent a future, not by providing the next app."

Yet, there probably still needs to be some operational help. And this is why the new chairman of the board, Robyn Denholm, should be a good move. She has the right resume , with extensive senior-level financial experience at companies like Sun Microsystems, Juniper Networks (NYSE: JNPR ) and Telstra. She even has an auto background, having worked at Toyota Motor (NYSE: TM ).

As Tesla focuses on the mainstream market, there will certainly be a need to have more rigor and process in the organization. Denholm will also be involved on a full-time basis.

Bottom Line on Tesla Stock

Despite all the craziness, Musk has been able to somehow scale Tesla's production (although, perhaps the craziness has been a key factor) - just look at the latest earnings report, which was standout.

Musk was able to find ways to deal with the production problems of the Model 3, which saw weekly volumes hit 5,000+. As for revenues, they came in at $6.82 billion, up from $2.98 billion on a year-over-year basis. Tesla also posted net income of $516 million and operating cash flow of $1.4 billion. In fact, it looks like the company will not have to seek more funding.

And the momentum is likely to continue. Keep in mind that Musk is finding creative ways to help deal with fulfilling orders - even purchasing trucking companies.

However, with the recent run-up in the stock, it could be tougher to see more sustainable gains, as it looks like much of the good news is baked into the valuation. After all, the average Wall Street price target on Tesla stock is $329, which is at a 3.5% discount to current levels. In other words, it may be best to wait to get a better price, especially since there will likely be continued volatility.

Tom Taulli is the author of High-Profit IPO Strategies , All About Commodities and All About Short Selling . Follow him on Twitter at @ttaulli . As of this writing, he did not hold a position in any of the aforementioned securities.

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The post Will Tesla Stock Find Another Gear Amidst Market Sell-Off? appeared first on InvestorPlace .

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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