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Baron Funds Comments on Tesla Motors Inc.

August 08, 2013 | About:
Holly LaFon

Holly LaFon

Tesla Motors, Inc. (TSLA) showed significant price appreciation during the second quarter as it continued to execute on its innovative electric vehicle (EV) business model in a nearly flawless manner. The company delivered its first profitable quarter, although we note that all of its profits came from sales of non-recurring regulatory zero-emission credits. More importantly, it appears the company is on track to achieve its 2013 goals for production and deliveries of its Model S premium EV sedan, as well as automotive gross margins. Management has also expressed confidence in reaching its longer-term goal of producing a smaller, more mainstream (less expensive) EV sedan within a few years. We sold the remainder of our Tesla shares during the quarter after the stock almost tripled against our average cost base, though in 20/20 hindsight our sale may have been too hasty as the stock has continued to work higher. We remain big fans of Elon Musk and Tesla, and plan to stay close to this pioneering company with an eye towards re-investing at a more attractive level. (Randy Gwirtzman)

From Ron Baron’s second quarter 2013 commentary.

Rating: 2.3/5 (3 votes)


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