Breakout

Tesla Is the New Apple: Najarian

Jeff Macke
Breakout

Tesla's (TSLA) stock has done nothing but make people money but you wouldn't know it from the Twitter-sphere. Any mention of the electric car industry leader's stock in a favorable light is met by the sneering contempt unique to bears. Sure there are devotees but for the most part Tesla is regarded as a stock for cult-members, not investors.

"If you talk positively about Tesla you're some sort of fiend," says OptionMonster's Jon Najarian. "There are so many haters... you can see it by the 30% short interest." In that sense Najarian says he hasn't seen such instinctive contempt for "cult-ish" shareholders since the days when Steve Jobs was running Apple (AAPL).

Comparing Tesla creator Elon Musk to Steve Jobs isn't a new idea, but it's hard to find many parallels to Musk among living CEOs. In fact there are those who don't think Jobs is worthy of being held in the same regard as Jobs.

Related: Elon Musk 'Even More Amazing Than Steve Jobs,' Says Jurvetson

One key difference is that Apple never seemed particularly overvalued and obviously it's hard to make a strictly fundamental case for Tesla. Like Facebook (FB), Tesla is unquestionably winning a race where the stakes are assumed to be large yet unknown. Facebook has a leading position in understanding users' social network but no one really knows what such information is worth. Tesla has pole position in the electric car industry. All they have to do now is prove there will be an electric car industry in five years.

Tesla is up nearly 400% so far in 2013. There's a reason the self-defined sophisticated traders are so skeptical. With a market cap of more than $20 billion Tesla seems to have priced in a significant amount of optimism. For the sake of quick comparison, Tesla trades at 15x trailing 12-month sales; more than 30x higher than the price-to-sales valuation of Ford (F).

After the run it's had it's all but impossible to make a case for chasing Tesla shares but that doesn't mean the shorts won't get squeezed out of their positions before the top. "It is ahead of itself," concedes Najarian, "but I don't think the shorts are going to be right."

When it comes to betting against cult stocks, being "wrong" and being early are the same thing.

[At the time of publication Jeff Macke owned shares of Tesla]

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