It's time to check in on one of the most volatile stocks on the market, Tesla Motors Inc. (Nasdaq: TSLA).
The Tesla Motors stock price in 2015 has ranged from a high of $223.40 to a low of $185. It's down 3.2% today (Monday, March 2) after Bank of America analysts maintained their "Underperform" rating.
One of its most dramatic plunges came after it released disappointing Q4 earnings Feb. 11. TSLA opened 9% lower Feb. 12 after it fell short on earnings per share (EPS), revenue, and vehicle deliveries.
As we've stressed at Money Morning, Tesla stock is not for conservative investors. It will be volatile. It doesn't fit in every portfolio.
But the profit potential it's tapping in to with new projects and investments will pay off for patient investors.
"I believe Tesla is one of the best long-term investments an investor can make at the moment," Money Morning's Chief Investment Strategist Keith Fitz-Gerald said. "If there is ever a case to buy a few shares and tuck them away, this is it."
Here are the numbers and initiatives that will drive Tesla Motors' stock price long term...
Long-Term Goals Will Drive TSLA Motors Stock Price
What the short-term performance of Tesla's shares fails to reflect is how the company is disrupting a couple areas within the tech sector.
"Tesla is a game changer on several levels," Fitz-Gerald said. "First, it's rewriting the auto industry's outdated sales model and forcing change in Detroit and beyond. Second, it's developing new technology that reaches beyond anything out there and beyond the cars where it will first be applied."
One of Tesla's biggest goals is a lithium ion battery plant: the Gigafactory.
Tesla's Gigafactory is a $5 billion undertaking designed to revolutionize the lithium-ion battery market. According to the company, it will reduce cell costs dramatically, and increase output significantly.
The Gigafactory is expected to power more than 500,000 vehicles annually by 2020. That's more annual production than was produced globally in 2013. When these batteries are mass produced, the cost of Tesla's vehicles should drop accordingly. That will make the company more than just a luxury vehicle maker.
"The Gigafactory is expected to have a dramatic effect on the energy storage market, helping to bring battery costs down by as much as half by 2020," Money Morning's Global Energy Strategist Dr. Kent Moors said.
And the applications stretch far beyond cars. Lithium ion batteries are also used in tablets, smartphones, and laptops.
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Company officials announced Wednesday that construction started two months ago. The company maintains its goal of beginning battery pack construction in the factory by 2016.
According to Bloomberg, Musk has also detailed a new plan for batteries capable of powering homes, which the company does not offer yet. These batteries - coupled with solar panels - would allow homeowners to power their houses and businesses without purchasing electricity. They could also help large utility companies store energy more efficiently.
Musk believes production of these home batteries could be just six months away. The company will begin testing them in California shortly.
"The California test will utilize a solar battery with the ability to power a home for two days in the event of a blackout," Moors said. "In everyday use, the unit is expected to allow homeowners to store solar-generated power for use during high-cost periods, giving them the flexibility to use the conventional grid for cheaper, off-peak electricity."
Moving into the housing market is another long-term goal for Tesla. It shows how disruptive the company's technology really is, and how the company is more than just an automaker.
Predicting the short-term performance of the Tesla stock price is impossible, and according to Fitz-Gerald there is still a possibility it pulls back further. But if you're in it for the long haul, that's just a blip on the radar.
"Technically speaking, the company may fall to the $175 range before the selling is done. But, again, I wouldn't necessarily avoid buying it at these levels either. It all depends on your perspective."
Right now, analysts surveyed by Thomson/First Call have an average price target of $260 for TSLA. That's more than 26% higher than today's opening value of $205.70.
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