Tesla TSLA reported earnings this morning. The company announced the sale of 5,500 Model S cars, revenues of over $430 million and a loss of $38 million. The company said what is holding it back is lack of batteries and constraints on the supply line, not demand.
There are also other automakers now entering the electric market, which will add to competition.
I do realize that Tesla is growing faster than other carmakers, but is there a reason that an electric car maker should trade at a nearly twentyfold the valuation of other carmakers, whether they are based in India, the United States, or Japan?
Amazon.com has become a staple in the Internet retail business, but during the 2000-2002 tech wreck, its stock fell nearly 90% in price.
Highfliers have higher valuations and more air in the balloon, so they tend to fall faster.
Even if Tesla becomes a great buy at the bottom of the next bear market, its valuation suggests that it's due for a big tumble. Today's decline could just be the start of such a sell-off.
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What Apple's 2013 Shopping Spree Tells UsThe following article is from one of our external contributors. It does not represent the opinion of Benzinga.
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