The Tesla stock price has remained volatile all week, reaching a high of $267.26 on Monday before dipping to a weekly low of $251.62 on Tuesday. Today, Tesla Motors Inc. (Nasdaq: TSLA) stock was back in the middle of that range, at a high of $258.80.
For those who have followed TSLA stock in 2014, that volatility is hardly earth-shattering. Even the slightest bit of news has been enough to move the stock drastically.
But this week, it was a big announcement from Chief Executive Officer Elon Musk that was moving TSLA stock...
Last Friday, Musk announced that Tesla will begin offering lifetime mileage warranties on the drive units of its Model S sedans. Tesla already has an unlimited mileage and eight-year warranty on its vehicles' battery packs, and has now extended that warranty to the drive unit.
"[T]he warranty extension will apply retroactively to all Model S vehicles ever produced," Musk said on the company's blog. "In hindsight, this should have been our policy from the beginning of the Model S program. If we truly believe that electric motors are fundamentally more reliable than gasoline engines, with far fewer moving parts and no oily residue or combustion byproducts to gum up the works, then our warranty policy should reflect that."
While the improved warranty is a huge benefit for Model S owners, Musk admitted that the new policy could impact Tesla's earnings in the short term. But for Musk, the long-term vision of the company and the electric vehicle (EV) market remains the top priority.
"However, by doing the right thing for Tesla vehicle owners at this early stage of our company, I am confident that it will work out well in the long term," Musk said.
The day of the announcement, TSLA stock had its highest closing price of 2014, at $262.01.
The warranty extension is just the latest example of Musk's innovative leadership and long-term vision...
Earlier in the summer, he opened all of the company's charging technology patents, hoping to bring competitors together collaboratively. The motive was to improve charging technology universally, thus lifting the entire EV market. According to Musk, that's been the company's goal all along.
"Tesla Motors was created to accelerate the advent of sustainable transport," Musk said at the time. "If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal."
It's clear that the short-term performance of TSLA stock is not what drives Musk. He's an innovator who wants to change the world and has the determination to do so.
And that's why Money Morning experts are so bullish on TSLA stock long-term...
How Elon Musk Will Help the Tesla Stock Price Double
"Creativity as a thinker who can't be boxed-in by entrenched competitors, the ability to cheerfully put tens of millions of his own money behind his vision when necessary, a solid grasp of what technology means for the industry he operates in... all of these are great qualities in a CEO," Money Morning's Chief Investment Strategist Keith Fitz-Gerald said. "Any company, big or small, is lucky to have a chief executive with just two of them. Tesla has all three in Elon Musk."
"He's a visionary who can afford to be a visionary," Fitz-Gerald continued. "We saw proof of this in April 2013, when Musk guaranteed a buyback value for his electric cars, which he pledged to honor with his own money should Tesla be unable to."
That same short-term sacrifice was evident again this week, when Musk informed shareholders that earnings may dip in the next quarter, but the long-term payoff will be worth it.
Because of that vision both Fitz-Gerald and Money Morning's Defense and Tech Specialist Michael Robinson are bullish on TSLA stock.
"I believe TSLA stock will double within the next 12 months," Fitz-Gerald said. "This company is on track to see a stock explosion that will make its surge back in the spring of 2013 look like a speed bump."
"Tesla has enormous long-term potential," Robinson said. "The best way to play the stock is for the long-haul. Musk is really a great visionary."
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