US: Tesla is a paradox auto company image

While it reported fourth quarter earnings last week, Tesla’s shares again sky jumped, although the company actually had a loss. But the Californian auto start-up is definetly still America’s investor sweetheart.

With a CEO well known before the company’s existence and the unstoppable (even by a fire) share rising, Tesla is a company not to be gambled with. Although it trades roughly 1,200 times its earnings, in 2013 it actually lost money – $74 million to be more precise.

“If you’re in your 20s or 30s and want to engage in wild speculation or buy something small for a grandchild, go ahead,” said Erik Gordon, adjunct professor of entrepreneurial studies at the University of Michigan’s Ross School of Business. “Otherwise it’s only for folks with the biggest appetite for risk at this price.”

For the fourth quarter Tesla reported loosing $16 million, the shares traded well above the $200 mark ($209.60 at the close last week on Friday) – with sales of its Model S flagship sedan in the low digit area but with a company net worth close to three times that of Fiat.

“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 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.”

While sales last year of the Model S in the US were of only 22,000, the company expects further growth this year to reach 35,000 units – on its Chinese and European expansion. And the plans don’t stop there, as Musk seeks to build a battery “gigafactory” that would allow further sales and line-up expansion.