However, the love for all-things Apple has died down lately as shares of the computer giant have plunged. The once high-flyer is now down 25% over the past year, erasing many memories of its historic surge.
Thanks to this downfall, many investors have been looking for the next glamour stock, a firm to take the mantle from AAPL and captivate investors. While it has been a difficult search, some believe that we have found that next hot stock in newcomer Tesla Motors Inc (NASDAQ:TSLA).
Tesla has burst onto the scene in the past year thanks to its impressive looking cars, strong demand, and high-flying stock price. In fact, TSLA shares have skyrocketed by more than 400% in the past one year period, catapulting the company up the charts and into a number of investor portfolios.
Many are looking for this run to continue too, and the similarities between TSLA and AAPL are really starting to build. Consider a few of the following that they both have in common:
- Stock price- Both experienced an incredible surge, pushing them to the forefront of the investment news cycle in the process.
- CEO similarities- Elon Musk has been called ‘the next Steve Jobs’ and the vision of both men is largely credited for the rise of their respective firms.
- Product focus- Apple never focused on the low end consumer during Jobs’ heyday. The company zeroed in on ‘aspirational products’ and this has largely been Tesla’s goal as well.
- Second mover ‘advantage’- Apple didn’t invent the mobile phone and Tesla didn’t invent the electric car. Both transformed those products though and set a new standard in their markets.
However, some investors aren’t so sure, and believe that this might be a company that isn’t ready for prime time, or at least not the next Apple. Some of these reasons include:
- Profitability- Is Tesla really going to make money? The company is projected to post a loss this year, but is looking to somehow turn it into a 50 cent a share profit for the following year. This obviously is in huge contrast to Apple which has been making piles of profits.
- Government help- Many argue that Tesla is only where it is today thanks to the government. First the loans and now a plethora of tax credits which help to keep consumer costs of the cars down. Would TSLA be in its current position without these subsides?
- Good Comparison- Can you really compare a company that has sells roughly 5,000 cars in a quarter to one of the world’s most popular consumer products that sells more than 30 million iPhones in a quarter?
- Given what has happened to Apple stock lately, is being the next Apple even a good thing?
But what do you think? Is Tesla the next Apple stock, or is the company just a flash in the pan?
Let us know in the comments section below!
This article is brought to you courtesy of Eric Dutram.