Talking Numbers

Tesla's next move

Tesla's next move

Now watching

Next video starts in : 7 Play

Tesla's next move

Tesla's next move
Replay video
Up next

Japan never looked so good

Japan never looked so good Up next

Japan never looked so good

Tesla was firing on all cylinders (or whatever it is electric car motors do) this past quarter.

The electric car maker brought in $761 million in revenues – almost $84 million more than Wall Street expected – in the last three months of 2013. The company's bottom line trounced analysts' estimates as well; per share earnings were $0.33 compared to the anticipated $0.21.

With that new, Tesla shares spiked up to its all-time highs, hitting $215.77 in pre-market trading Thursday morning.

(Read: Tesla forecasts a big 2014)

However, portfolio manager John Stephenson of First Asset Investment Management is in no rush to buy Tesla's stock, which was trading at 137 times its estimated 2014 earnings as of Thursday morning.

"Even if you consider it a technology company, the average [price-to-earnings multiple] in the technology sector is 18 so it's way overvalued," says Stephenson, who believes Tesla is at a disadvantage to many tech companies. "There's no possibility of it becoming mass market because the battery technology isn't even up to snuff and won't be there for years."

Stephenson also doubts Tesla will be able to sustain its gross margins above 25%. "If you look at the margins of the competitors, BMW is 6.8% gross margin versus Daimler at 5.8%," says Stephenson. "If [Tesla] could achieve 25% margin continuously, then all obviously competition is coming in here."

"This is a screaming short," says Stephenson.

(Read: The giant bet that Tesla will fall 75 percent)

CNBC contributor Andrew Busch, editor and publisher of The Busch Update, is also wary of the stock.
"BMW sponsors the Olympics, Tesla sponsors volatility because that's what you get with this stock," says Busch.

To see the full discussion from CNBC's Street Signs' Talking Numbers segment with Busch's charts and Stephenson on Tesla's fundamentals, watch the video above.

View Comments (25)