You may or may not be aware, but the "famous" electric sports car manufacturer Tesla Motors is arriving on the NASDAQ this week (ticker TSLA). The IPO has priced above expectations and the company will have a market cap of around $1.5bn, even though it is currently losing $100m a year, and losses on this sort of scale will certainly continue into the near future.
This is the first IPO of a car manufacturer in the US since the 1950s.
http://seekingalpha.com/article/212273-can-tesla-motors-deliver-electrifying-growth?source=hp_wc
You may remember Top Gear testing the Tesla Roadster a couple of years ago. The car was described as "biblically quick" (which it is) but then it broke down on the track, and having no electric sockets nearby had to be hand-pushed back to the workshop.
I am really not sure whether this is the most obvious short I've ever seen, or the best growth story. What I do know however is that this car is most definitely not "green". The vast majority of electricity in the world is and will continue to be generated by burning coal, and the only way we could all convert to using electric vehicles is to burn orders of magnitude more of the stuff than we do now.
This is one reason why I like coal to liquids. It's a much cleaner way of using coal to power road-based transportation than electricity is.
Anyway, I think watching what happens to Tesla might be quite interesting, or even amusing. If I was rich I would definitely buy one just for a laugh, and put a "Coal-powered Car" sticker on it or something ... :-)
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Well, it closed up 40.5% on the day. Quite a feat considering the general market.
http://finance.yahoo.com/news/Tesla-Motors-shares-surge-in-apf-4181475241.html?x=0&sec=topStories&pos=5&asset=&ccode=
This reminds me a bit of LNUX (VA Linux Systems), the most successful IPO in US history (1999 or so), which had a business model based around "selling" free open source software. It went from $170 to near enough zilch in about 2 years ...
At the risk of being slightly controversial, I think that if you believe in electric cars you'd be far better of buying somebody like Peabody Coal rather than this lot. However, I wouldn't be surprised if it just keeps going up. Americans do love their delusions.
No offence meant, we Brits are no better. There's a British company called Lightning Cars doing exactly the same thing, however I can't see the ever-sceptical and parsimonious City being draw in to the dream in quite the same way as Wall Street. It will probably have to do whatever it does the hard way, remaining in the private sphere.
http://www.lightningcarcompany.co.uk
Before I go, an aside ...
If a Western company could come up with something like the LNG powered plane which the Russians have already produced, then that might be worth investing in.
http://www.tupolev.ru/English/Show.asp?SectionID=82
Electric power is good for trains and anything else which runs on fixed rails, but independent transport vehicles need liquid fuels.
In reply to Mattybuoy, post #1
I only read your comments this morning - but I thought you were being rather optimistic with the idea of shorting, even though you weren't sure which way to go..... ;-)
The thing about electric cars like Tesla is that they offer the concept of "being green" whilst still getting some driving pleasure....and IMO this is quite a powerful combination in the short to medium term as we start to fear "running out of oil". I've little doubt that early sales will be strong (and for Lightening cars in the UK too).....but the key question will be: "can they stay strong at levels that will make money?" - and I think, as with any new business, there must be some question over how scaleable the business is and how they will finance that expansion.
Perhaps a good trading vehicle though - and also perhaps one where the price drivers may be rather different to that of the wider market?
I rather like the idea of both Tesla and Lightening - though I still have some very serious road safety concerns over electric cars in general.
ee