How Audi bested Tesla

Remember this name: the Audi R8 e-tron. It’s the first electric car to outdo Tesla’s Roadster and Model S with a 280-mile range (that beats Tesla’s Model S by 10 miles or 3.7 percent).

Let’s get this out of the way: the R8 won’t directly compete with Tesla’s cars. For one thing, it’ll likely cost more than twice as much as the Model S with some analysts expecting a $200,000 sticker price. Sales will also be via special-order fulfillment only. Still, the e-tron’s a warning shot that should have Tesla investors nervous. Audi’s serious about capturing electric-car market share. They’re even taking a page out of Tesla’s playbook by first launching a supercar (comparable to the Tesla Roadster), which will help them fine-tune their technology.

Powered by a 92kWh t-shaped lithium-ion battery pack, the Audi has a higher top speed than the Model S (155 mph versus 130, though both are electronically limited) and a much faster charge time. Audi also claims the e-tron can charge in “significantly less than two hours.” That’s phenomenal considering standard charge time for the Model S can take more than 9 hours with a 240-volt outlet (superchargers are, of course, faster).

The Model S may have a slight edge in acceleration, though we don’t have an exact comparison. Published numbers say the Audi can run from 0-62 mph in 3.9 seconds. The Model S can do 0-60 in 3.2-seconds.

The most exciting part of the announcement is this: Audi’s e-tron will be a “mobile high-tech laboratory” (source). The company’s using the supercar as a test bed to push the envelope. They’ll take what they learn to develop and launch a fleet of sedans and other Tesla competitors.

Interestingly, Tesla and Audi have similar market caps. Tesla’s worth $24.38 billion vs. Audi’s $29.58 billion. The difference is the fact that Audi’s actually profitable. The German automaker’s trading at a P/E ratio of 7.12 while Tesla’s burning through as much as $300 million per quarter.

This is just the beginning of a global war. Electric car technology will change everything about transportation and that means we’re going to see a whole lot of other competitors come to market. In many ways, it reminds me of the tech bubble in the 2000s. There’s just so much potential in the space that investors can’t help but get excited. Just remember that the sexiest companies don’t prevail. The company’s that do are the companies that know how to execute and make money. Audi’s already proven it can do both.

Five reasons everyone loves Tesla (TSLA) to the moon and back

Certain stocks trade on beliefs, ‘gut feelings’ and a desire for change in the world. They have a mixture of allure, great timing and, perhaps most importantly, a great story. Here are the five reasons why everyone loves the Tesla (TSLA) story.

As I wrote yesterday (see A stock’s ‘sex appeal’ plays big role in price), certain stocks trade on more than just reason and numbers alone. They trade on beliefs, ‘gut feelings’ and a desire for change in the world. They have a mixture of allure, great timing and, perhaps most importantly, a great story. Here are the five reasons why everyone loves the Tesla (TSLA) story:

1) Electricity is the future. No, our power grid isn’t ready to support 100 million Americans recharging their cars at night, but if we continue chucking solar panels on our roofs, that won’t matter. Electricity is cheap, it doesn’t pollute the earth, and it makes your car run quietly (like something off the Jetsons).

2) Tesla’s name is cool. Remind me to name my next company after a brilliant inventor who toiled in the shadows but eventually turned into a cult-hero with underdog street cred. Tesla’s like the Amazon.com of inventors while Edison’s like Walmart. You can’t undervalue a cool name. I think that’s why Hemp, Inc. (HEMP) is one of the more popular medical marijuana stocks right now.

3) Elon Musk has groupies. They say everything the guy touches turns to gold. I have to admit his resume is almost as good as mine. He co-founded Zip2, SpaceX and PayPal. He leads Tesla Motors and he tossed his idea for the Hyperloop onto the web and encouraged someone else to take it on… Oh yeah, he’s the chairman of SolarCity (SCTY), too.

4) Tesla’s cars are sexy. The Roadster turned electric cars from novelties into something lust-worthy. I don’t care if the thing’s powered by fish heads and spoiled milk, it’s one of the coolest looking cars I’ve ever seen. The Model S makes sedans seem cool, and the Model X has gull wings!

5) Tesla has moxie. Everything about the company is challenging the status quo. Its approach to power blindsided GM, Toyota and Ford. Its factories hardly need humans. It’s going to war with car dealership cartels by offering direct sales, and it’s trying to roll out charging stations and new consumer batteries.

Tesla’s ridiculously overvalued right now, but Muskovites don’t care. It’ll be interesting to see if Tesla can actually transform itself into a profitable company that warrants such enthusiasm. In the meantime, I’m content watching TSLA’s shares rocket to the moon from the safety of earth.

A stock’s ‘sex appeal’ plays big role in price

Investors greatly underestimate a stock’s ‘sex appeal’ when they’re trying to value a company. There are a handful of companies that have something special: a great niche at precisely the right point in history, a compelling story or a truly revolutionary idea. Those stocks don’t trade on reason and numbers alone. They trade on beliefs, ‘gut feelings’ and a desire for change in the world.

Last summer, a friend of mine asked me what I thought about investing in Tesla (TSLA). At the time, Tesla had shot up from $30 to north of $100. It was up more than 250 percent in the space of a few months. I told my friend we’d missed the boat. The stock had run too far too fast.

Boy was I wrong. Telsa has more than doubled since then. And that leads me to my thesis for this post: investors greatly underestimate a stock’s ‘sex appeal’ when they’re trying to value a company. There are a handful of companies that have something special: a great niche at precisely the right point in history, a compelling story or a truly revolutionary idea. Those stocks don’t trade on reason and numbers alone. They trade on beliefs, ‘gut feelings’ and a desire for change in the world. Put another way, they trade on hope, hype and hot air.

And yet, we can’t discount the power of a transformative company or CEO to grow into incredibly high expectations for a stock. The example I like to give is Amazon (AMZN). People complain about the valuation of a company like Facebook (FB), which is trading at a P/E of 92. But people aren’t that surprised Amazon’s trading at a P/E of 587!

And yet, Amazon is one of the few tech stocks that’s trading well above it’s dot-com highs from the late 1990s. 15 years ago, Amazon was just an online bookseller. Today, it’s a retail shopping giant, a media powerhouse for online movies, music and books, a hardware manufacturer, a cloud hosting company and a database of product reviews that’s unrivaled. Amazon has lived up to the hype.

Not every company lives up to the hype, of course, but you can’t deny that a few companies do. With that in mind, here’s my stab at a list of the Top 12 stocks with the biggest ‘sex appeal’ right now:

  1. Tesla (TSLA)
  2. Facebook (FB)
  3. Netflix (NFLX)
  4. Amazon (AMZN)
  5. Twitter (TWTR)
  6. Plug Power (PLUG)
  7. Pandora (P)
  8. RF Micro Devices (RFMD)
  9. Under Armour (UA)
  10. NQ Mobile Ads (NQ)
  11. 3D Systems (DDD)
  12. HEMP (HEMP)

I’m going to start blogging more about each of them regularly in the future so stay tuned!