Caution Grows in Tesla as Quiet Period Ends (TSLA)

Tesla Motors, Inc. (NASDAQ: TSLA) has seen a strange trading pattern since its IPO first came to market in June.  The quiet period has now ended and the analyst pool has begun coverage of the electric luxury and sports car maker.  As we expected, the bias here is one of caution rather than one of endless gains.

Deutsche Bank started coverage as “Hold” with a $17.00 price target.  Morgan Stanley started coverage as “Equal-weight” and we have yet to see the full Goldman Sachs “Neutral” initiation.

J.P. Morgan started coverage as “Overweight” with a $25.00 price target.  Jamie Dimon doesn’t run that research department for J.P. Morgan, so there might be a discount to the research considering there were three cautious calls versus one positive call.

Last week we gave Investor Place the trade idea that staying cautious was the way to go and we looked at the Tesla Aug-2010 $18.00 Puts at $0.45 as the options trade for speculating on caution.  The price compression has begun and those are trading at $0.40 despite that the stock is lower.

Tesla is one of those situations where it depends upon your stance on “green” energy.  Some feel this is a pure gimmick and some feel this is the future.  Either way, competition is coming at a far lower price.  The valuation of Tesla may need to see more softness before any real analysis is necessary here.

JON C. OGG