Tesla's risk isn't for every investor
After reporting a $16-million loss for the fourth quarter last week, Tesla shares soared more than 8 percent Thursday before retreating slightly Friday to close the week at $209.60. The reason was slightly better than expected sales and signs that China sales are poised to soar. This 10-year-old Silicon Valley company has shocked the world, with its all-electric luxury cars that sell for between $75,000 and $110,000 each. With the help of a $465-million federal loan, which it has repaid, and an existing factory formerly operated by a Toyota-General Motors joint venture, Tesla has exceeded all expectations. At $210, the market is valuing Tesla slightly less than half as much as General Motors and three times Fiat’s market capitalization. "Tesla should be viewed not as a traditional auto company, but more like an innovative tech company," said Sudip Datta, professor of finance at Wayne State University. "While the P/E [price-earnings ratio] is in nosebleed territory and it has lost money, the market is reacting to the great reception it is getting in China and its forward guidance."
