Should I invest in American Riviera Bank stock (ARBV)?

Here are three reasons to invest in American Riviera Bank stock (ARBV) and three reasons to avoid it.

What does American Riviera Bank (ARBV) do?

A small bank in Santa Barbara, Calif., American Riviera opened in July of 2006. It’s done well, too, recently recently merging with The Bank of Santa Barbara. That gives ARBV two community branches, both of which are focused on growing their deposit bases and expanding lending.

Three reasons NOT to invest in American Riviera Bank stock (ARBV)

1) Under-performance. Year-to-date, ARBV is underperforming the S&P 500. Shares are up 3 percent while the broader market is up north of 5 percent. Still, that’s better than some of the nation’s largest banks. Bank of America (BAC), for example, is down more than 7 percent this year, and JPMorgan Chase (JPM) is down half a percent.

2) Merger woes. ARBV recently merged with The Bank of Santa Barbara. Unexpected costs or difficulties with the merger could impact the bank’s ability to make a profit. Mergers that look great on paper can sometimes result in culture clashes that negatively impact a business.

3) Over-the-counter shares. ARBV trades over-the-counter – not on a national securities exchange like the NASDAQ. That means ARBV isn’t held to the same stringent reporting requirements as companies on the NASDAQ. We know less about ARBV than we do other banks that trade on the NYSE.

Three reasons to invest in American Riviera Bank stock (ARBV)

1) Strong growth. 2015 saw significant growth for the bank. According to ARBV’s 2015 annual report, the company grew its average total loans by 14 percent to $179 million. The bank also grew its average assets by 12 percent to $232,000. All told, the bank had net income of $1,303,000 in 2015 (unadjusted for non-recurring merger-related costs). That worked out to $0.48 per share. “Our bank finished the year with a record $249 million in assets and 18% higher pre-tax income over 2014 excluding merger related costs,” the company wrote.

At the end of 2015, ARBV had a book value of $10.56. Today, shares are trading at $11.65. Over the past five years, ARBV shares have appreciated more than 124 percent. That’s well above the S&P 500’s return of 84 percent. “Our goal is to reach a $1 per share earnings run rate by year end,” ARBV wrote early in 2016.

2) Great track record. American Riviera Bank celebrated its 10th anniversary on July 18, 2016. The finance industry is one of the most heavily regulated industries on the planet. Staying in business and growing over the course of a decade (particularly through the housing and financial collapse of 2007-2008) is impressive.

3) Merger time. American Riviera Bank merged with The Bank of Santa Barbara effective January 1, 2016. While this is adding significant merger-related costs to the company’s books, ARBV believes the “merger has positive financial synergies.” If you’re looking for growth, two branches are better than one.

Should I buy American Riviera Bank stock (ARBV)?

ARBV’s shares look appealing so long as interest rates begin to normalize. Artificially-low interest rates make it difficult for banks to generate big profits as the spread between their borrowing rate and the rate they lend to customers is small. If ARBV can continue to grow, it will do so by capturing more of the Santa Barbara County market – an area with a median household income of $63,409. Santa Barbara County is the 17th-wealthiest county in California. Right now, ARBV controls 2.77 percent of the market there (by deposits).

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here. Full disclosure: I do not own a position in ARBV, and I do not plan to initiate one in the next 72 hours.

Should I invest in NZCH Corp. stock (ZPCM)?

Here are three reasons to invest in NZCH Corp. stock (ZPCM) and three reasons to avoid it.

What does NZCH Corp. (ZPCM) do?

NZCH was formed in Nevada in 1999 with the goal of “creating and operating a global network of independently owned websites.” As of last year, HRG Group owned approximately 97.9% of the company’s outstanding common shares. NZCH Corp.’s stock is currently classified as a penny stock.

Three reasons NOT to invest in NZCH Corp. stock (ZPCM)

1) No revenue, no focus. Formerly Zap.Com Corporation, NZCH Corp. owns a portfolio of domain names. Their dotcoms include nine names: betacenter.com, betaworld.com, buybid.com, eatfood.com, instantwinner.com, netcentralbank.com, paranoid.com, thefed.net and zap.com. Unfortunately, NZCH Corp. hasn’t figured out what to do with its portfolio of names. “The Company has not identified a specific industry to focus on,” NZCH writes. “As of June 30, 2016, the Company had not generated any revenues.”

2) Shedding cash. Over the past two years (2014-2015), NZCH Corp. lost about $150,000 a year. That loss was attributed to SG&A (Selling, General and Administrative Expenses) with $50,000 per year going to auditing. As of Dec. 31, 2015, the company had $595,514 on hand. At the NZCH’s current burn rate, it’ll be out of money in four years.

3) Thin trading. NZCH is a penny stock, but it’s thinly traded even for a penny stock. Average trading volume is 27 shares a day! Shares often go weeks without a single trade. That means if you buy some ZPCM and want to offload it, it could be weeks or months before you find a buyer.

Three reasons to invest in NZCH Corp. stock (ZPCM)

1) Leadership. The company’s president and CEO, Omar M. Asali, has an impressive resume. He currently heads up HRG Group Inc., a $3.2 billion company that trades on the NYSE under ticker HRG. HRG owns and operates NZCH Corp. Before joining HRG, Mr. Asali was Head of Global Strategy at Harbinger Capital Partners, LLC. “Before joining Harbinger Capital in 2009, Mr. Asali was the co-head of Goldman Sachs Hedge Fund Strategies (‘Goldman Sachs HFS’) where he helped manage approximately $25 billion of capital allocated to external managers,” per HRG Group. Over the past five years, HRG’s stock is up more than 500 percent. If Mr. Asali can’t figure out a business strategy for NZCH Corp. it’s probably because he doesn’t have time to devote to it.

2) Domain names. As stated above, NZCH does own the rights to nine domain names: betacenter.com, betaworld.com, buybid.com, eatfood.com, instantwinner.com, netcentralbank.com, paranoid.com, thefed.net and zap.com. Domain names are like real estate on the internet. NZCH could build whatever they want on any of their domains, and domains do have some intrinsic value. Insurance.com, for example, set an international record when it sold for more than $35 million in 2010. Zap.com is a memorable, three-letter domain, which gives it some value. That said, I’m not particularly impressed with NZCH’s other domains. If they build a thriving business out of any of their domains, it will be because of the underlying businesses – not the domain names.

3) Upward trend? ZPCM shares recently hit a 52-week high at $1.75.

Should I buy NZCH Corp. stock (ZPCM)?

Put it on the back burner. If and when they come up with a business strategy, it might be worth taking another look. My best guess is HRG will eventually sell their domains and shut down NZCH.

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here. Full disclosure: I do not own a position in ZPCM, and I do not plan to initiate one in the next 72 hours.

Listing the top 8 highest-rated silver stocks

If you’re ready to wade into the silver markets, start with the market leaders. Here are the Top 8 silver mining stocks with the highest analyst ratings. A rating of 1 is a “strong buy.” A rating of 5 is a “sell.”

Company Ticker Analyst rating YTD return
Silver Wheaton Corp. SLW 1.9 -28.8%
Mines Management, Inc. MGN 2 -40.4%
Coeur Mining Inc. CDE 2.6 -37%
Silver Standard Resources Inc. SSRI 2.6 48.6%
Endeavour Silver Corp. EXK 2.7 -18%
Fortuna Silver Mines Inc. FSM 2.7 -45.7%
First Majestic Silver Corp. AG 2.8 -23.3%
Hecla Mining Company HL 3 -17.5%

Just one of the stocks above is in positive territory for the year: Silver Standard Resources. And what a year its had leaping up by nearly 50 percent in value.

Here’s the same group of stocks listed by market cap:

Company Ticker Market Cap
Silver Wheaton Corp. SLW $5.5 billion
Hecla Mining Company HL $834 million
Silver Standard Resources Inc. SSRI $582 million
First Majestic Silver Corp. AG $439 million
Coeur Mining Inc. CDE $438 million
Fortuna Silver Mines Inc. FSM $305 million
Endeavour Silver Corp. EXK $173 million
Mines Management, Inc. MGN $8 million

What do analysts like about the top 3 stocks on the list?

1) Silver Wheaton Corp. Hands down, Silver Wheaton has my favorite business model in the precious metals industry. Known as a “silver steaming” company, SLW helps other companies fund the development of future mines in exchange for fixed-cost silver when those mines becomes operational. That’s how SLW currently has fixed costs for silver production of $4.36 per ounce.

2) Mines Management, Inc. This one makes me nervous. Mines Management has been in danger of getting de-listed by the NYSE after its share price faltered. Additionally, the company has posted losses over the past five fiscal years. Mines Management did submit a compliance plan to the NYSE, which was accepted. The company has until the end of 2016 to get compliant. It’ll likely need an infusion of cash to do so. The company’s primary asset – the Montanore silver-copper project located in northwestern Montana – holds 166 million ounces of silver per a Canadian National Instrument (NI) 43-101 that was completed in 2011.

3) Coeur Mining Inc. Analysts currently have an average price target of $6.46 on Coeur Mining. That’s 100 percent more than the stock’s current price of $3.22. Coeur did surprise analysts with a smaller-than-expected loss last quarter. The company lost $0.11 per share vs. the consensus estimate of -$0.22. Revenue hit $166.3 million vs. an estimate of $165. “On average, equities research analysts anticipate that Coeur Mining will post ($0.76) EPS for the current fiscal year” (source).

See related: I’m a bull on Silver Wheaton: Here are 3 reasons why.

Photo credit: JM Griffin and Michael LaTerz.

2016 silver price predictions: Look for a recovery

Four years ago, analysts everywhere were making predictions about the price of silver. Now, it’s hard to find anyone talking about it. Paul Mladjenovic, author of Precious Metals Investing for Dummies, believes prices for the white metal will bolt higher in 2016, though. Indeed, he believes silver has a “strong chance at hitting” $25 to $29 next year (source).

Adam Koos, president of Libertas Wealth Management Group, agrees without giving a specific price target. He expects silver to start a bull run late in 2016. “Take a little hiatus until 2016 … when the US president will be a huge question mark, US stocks will most likely pick up in volatility and any rate increases will have already been priced into the metals,” he told MarketWatch.com this summer.

Kunal Shah, head of commodities research at Nirmal Bang Commodities, believes silver prices should settle between $16.95 and $17.40 per ounce by the end of 2016. “Industrial demand has remained very strong from electrical, solar and various industries so we recommend that any decline in silver prices now should be used as excellent buying opportunity,” he says (source).

That falls in line with silver price predictions from a Reuters poll over the summer. Polled analysts expect silver prices to recover to $17.21 an ounce in 2016 (source).

RBC analysts expect silver prices to be around $19 an ounce by 2018 (source). That’s roughly 20 percent higher than today’s silver price of $15.50. That’s not exactly a big surge. RBC is, however, bullish on a handful of gold and silver stocks. While silver prices have plummeted, stocks in the sector have gotten hit even harder. They should start recovering rapidly as the price of silver drifts higher.

One of the biggest silver bears I can find is Jing Pan, a research analyst and editor at Lombardi Financial. Pan believes we could see a squeeze next year that might push silver prices up to $31 an ounce (source). He cites decreased mining activity, elevated demand and a skewed gold-silver ratio as the major drivers. Today’s gold-silver ratio hovers around 72:1. If we get to 35:1, we’d be around Pan’s target price, and that’s still far higher than the “natural” gold-silver ratio of 17:1.

Interestingly, 2015 is expected to be the first year in 12 years that silver mining output will actually decline. “We’re just not seeing the investment in new mine capacity that would be needed to sustain continued record peak production,” Andrew Leyland, an analyst with GFMS, told the Wall Street Journal. GFMS forecasts silver prices will average $16.50 an ounce in 2015, and rise to $17.50 an ounce in 2016.

Photo credit: Loopack.

I’m a bull on Silver Wheaton: Here are 3 reasons why

This post is part of our 3-up, 3-down series where we look at three bullish arguments and three bearish arguments for momentum stocks. Look at the facts, and you decide. See more posts on SLW here.

The bullish case for Silver Wheaton

1) Low-risk business model. Hands down, Silver Wheaton has my favorite business model in the precious metals industry. Known as a “silver steaming” company, SLW helps other companies fund the development of future mines in exchange for fixed-cost silver when those mines becomes operational. That’s how SLW currently has fixed costs for silver production of $4.36 per ounce.

2) Record production. Other companies may be shuttering mines, but Silver Wheaton continues to hit all-time record production numbers. In Q2 2015, the company produced 11 million silver equivalent ounces and sold more than 10 million ounces of silver for the first time in the company’s history.

“The record production and sales were driven by strong results from all of our flagship assets the Salobo, San Dimas and Penasquito mines as well as the first substantive production from Constancia, which achieved commercial production earlier this year,” said Randy Smallwood, SLW’s president and CEO, during last quarter’s conference call. Those numbers will continue to grow as we’ll see below.

3) Leveraged growth. Silver Wheaton is growing its silver production at a time when silver prices could start edging up. Any rise in silver prices leverages profits that the company books. For 2015, SLW expects production to grow by 23 percent over the previous year. That would put them at 43.5 million silver equivalent ounces. The company expects that growth to continue steadily through 2019 when they should produce 51 million silver equivalent ounces. The higher the price of silver, the higher the company’s profits. Take a look at the table below to see how much a jump in the price of silver could impact Silver Wheaton’s profits (assuming their costs stay at $4.36 per ounce):

Price of silver SLW profit on 50 million ounces of silver
$15.25 $544,500,000
$20.25 $794,500,000
$30.25 $1,294,500,000

Since Silver Wheaton’s cost basis for its silver will not rise, the company can book virtually any gain in the price of silver as profits.

Check out more coverage on SLW here.

Up 48% YTD: This is the hottest sector on the stock market in 2015

The S&P 500 is down more than 5 percent this year. Don’t bother telling that to the Internet and Catalog Retail sector. This small sub-sector of stocks is up a scorching 48 percent this year. That beats every other industry sub-sector on Wall Street. Here’s a look at the Top 10 stocks in the sector and their performance year-to-date:

Company Ticker YTD Return
Netflix NFLX 117.0%
Wayfair W 80.6%
Amazon AMZN 67.8%
Expedia EXPE 40.5%
CTRIP International CTRP 37.5%
Nutrisystem NTRI 36.9%
JD.com JD 14.5%
1-800-FLOWERS FLWS 11.8%
Petmed Express PETS 11.6%
Priceline PCLN 9.3%

Do any of the stocks above have more upside? Let’s take a look at their current share prices and compare them to the average analyst’s price targets for the stocks:

Ticker Current Price Avg. Target Potential Upside
NFLX $106.11 $119.30 +12.4%
W $36.18 $51.44 +42.2%
AMZN $532.54 $650 +22.1%
EXPE $122.62 $128.96 +5.2%
CTRP $66.77 $88.72 +32.9%
NTRI $26.10 $31.15 +19.3%
JD $28.91 $37.99 +31.4%
FLWS $9.80 $14.25 +45.0%
PETS $16.32 $13.67 -16.2%
PCLN $1,265.68 $1,480.65 +17.0%

Wayfair and 1-800-FLOWERS both pop out. What has analysts so excited about these stocks?

The bullish case for Wayfair

Wayfair runs several online ecommerce sites geared toward home decor. Specifically, they operate Wayfair.com, Joss & Main, AllModern, DwellStudio and Birch Lane. The company blew away analyst expectations in Q2. Quarterly revenue surged 66 percent year-over-year to $491.8. That bested analyst estimates by more than $50 million. On top of that, the company lost less money than analysts expected (woo-hoo!). They reported a $0.15 loss. Analysts were expected a non-GAAP loss of $0.29. Wayfair is at least growing its customer base. The number of active customers on their properties rose 53 percent year-over-year to 4 million. I’m on the fence here. The stock’s gone up so quickly, I’m wary momentum could snap the other way. I’d play it safe and buy shares in a company that’s actually profitable.

The bullish case for 1-800-FLOWERS

The online flower-delivery company, 1-800-FLOWERS also crushed earnings estimates for Q2. It beat estimates by posting a smaller loss than expected ($0.13 per share instead of $0.19 per share). That loss isn’t all bad. The company’s very seasonal and so is its latest acquisition, Harry & David’s. If it weren’t for Harry & David, the company would have posted adjusted earnings of $0.01 per share. That’s not enough to get me overly excited.

Of course, not every stock in the sector has fared so well. Here are the bottom five stocks in the Internet and Catalog Retail sector:

Company Ticker YTD Return
CNOVA CNV -61.8%
EVINE LIVE EVLV -61.7%
Groupon GRPN -60.6%
Light In the Box LITB -58.0%
Land’s End LE -50.2%

The overall market is down, but there are stocks out there that are out-performing. With a little homework, you can find them.

Photo Credit: Tanel Viksi

2016 silver price predictions: Are we headed up or down?

Let’s take a look at the latest silver price predictions for 2016 as part of our Three-up and Three-down series. We’ll present three bullish arguments for silver prices and three bearish arguments as well. Then, you decide where you think silver’s headed next year.

The bullish case for silver in 2016

1) Devaluing the yuan. Earlier this year, China abruptly announced it would devalue the yuan by 2 percent against the U.S. dollar. The government wanted to spur economic activity in the People’s Republic. Instead, they spooked currency traders who started selling the yuan. In turn, that forced China to start selling some of its dollar holdings, so the country could buy its own currency. That heavy selling is putting downward pressure on the dollar. Some speculate it could lead to a considerably weaker dollar, which might encourage more investment in hard assets like gold and silver. Gaurav S. Iyer, a research analyst and editor at Lombardi Financial, speculates that the weaker dollar might push silver back toward its 2011 peak around $50 an ounce.

2) Supply strain. Most of the silver that’s mined in the world is a byproduct of mining for other metals (copper, zinc, gold and lead). Since metal prices have fallen across the board, mining companies have drastically cut expenses and lowered their production levels by shuttering some mines. Less gold, copper and zinc means less silver, too. “Take Canada, one of the world’s major silver producers, for example,” writes Michael Lombardi. “Year-to-date, silver mine production in Canada has declined by 20%.” This could lead to a silver supply crunch if the global economy starts picking up steam (as many expect it to do next year). That’s because silver’s used extensively in many high-tech products.

3) A skewed ratio. The silver-gold price ratio is north of 70. Put another way, an ounce of silver costs more than 1/70th the amount of an ounce of gold. “Over the last 40 years, the grey metal averaged a 42.8 conversion rate with gold,” Iyer writes. “History has shown that a rise in silver prices are all but guaranteed when the ratio tops 70. It’s sitting at 75 right now.” According to him, that means we could see silver prices surge 420 percent from where they are today.

The bearish case for silver in 2016

1) A strong dollar. China’s devaluing the yuan. India and the Eurozone are increasing their quantitative easing programs, and the U.S. Federal Reserve is planning to hike interest rates this year or early in 2016. All signs point to a strengthening dollar. And that negates one of the most powerful incentives to invest in silver: using it as a hedge against a dollar collapse.

2) Deflation. What will be the biggest determinant of silver prices in 2016? Whether we see inflation or deflation. Since precious metals have a finite supply, they act as a hedge against inflation (much like real estate and even stocks). When we’re in a low-inflation environment – or worse, a deflationary environment – it just doesn’t make sense to hold a large position in silver. Across the globe, signs are pointing toward deflation. Credit default swaps are rising, currencies in emerging countries are declining (a sign of slowing global growth) and the rising dollar is disproportionately punishing companies outside the U.S. If we tip toward deflation, we’re probably not going to have rising silver prices.

3) The bear market continues. I always follow momentum until that momentum is broken. Silver’s down more than 70 percent from its 2011 peak. The metal is in a bear market, and I’m not ready to call a bottom yet. Neither is JP Morgan.

Here’s their 2016 silver price prediction: “Silver prices will broadly continue their bearish trend for the coming two quarters before finding greater strength in the second half of 2016,” they said early last month. Specifically, JP Morgan is predicting silver prices will average $14.08 in Q1 of 2016 and $14.65 throughout the year.

Where do you think we’ll see silver prices in 2016?

Surgery Partners (SGRY) IPO: Should I invest?

Our newest series, 3-up, 3-down takes a look at new IPOs and offers up three reasons to invest in them and three reasons to avoid them. Then, you decide. Let’s take a look.

3 reasons to invest in the Surgery Partners (SGRY) IPO

1) Rapid growth. Surgery Partners operates 99 surgical facilities – five of which are surgical hospitals – across 28 states. 200,000 surgical procedures were performed in their surgical facilities last year. Surgery Partners managed that feat in the 11 years since the company was founded in 2014.

That growth has helped the company achieve “industry leading same-facility revenue growth of approximately 9% during 2014, and an average of approximately 8% annually on a pro forma basis from 2012 to 2014.”

“Our pro forma revenue for 2014 was $871.2 million, which represents a compound annual growth rate of approximately 83% compared to revenue of $260.2 million for the year ended December 31, 2012,” the company writes in its S-1 filing. “For the six months ended June 30, 2015, our revenue was $457.0 million, compared to revenue of $147.3 million for the same period during 2014.”

2) Acquisitions. Surgery Partners has a proven track record of acquisitions. “Acquiring facilities has been a core component of our strategy since inception,” the company writes. They focus specifically on how they can create synergies between their company and their target acquisitions. The right acquisitions allow them to reduce head counts, close offices and pay less for supplies thanks to bulk ordering. “As a result of our recent acquisition of Symbion, as of June 30, 2015 we have achieved annualized cost and revenue synergies in an aggregate amount of approximately $8 million. … We expect this acquisition to drive significant cost and revenue synergies over the next two to three fiscal years, which we estimate will ultimately exceed $30 million in the aggregate (an amount that includes the approximately $8 million of synergies realized as of June 30, 2015).”

Surgery Partners also acquired NovaMed, Inc. in 2011. That acquisition led to a $5.2 million reduction in expenses and generated $9.3 million in incremental revenue.

3) The right sector. Healthcare is outperforming the S&P 500 Index this year. It’s up 2.9 percent YTD vs. -2.92 percent for the S&P. Biotech’s taken a pounding recently, but healthcare staples like AMN Healthcare Services, Inc. (AHS), whic offers healthcare workforce solutions and staffing services to healthcare facilities, have performed better.

3 reasons NOT to invest in the Surgery Partners (SGRY) IPO

1) Gobs of debt. Between Surgery Partners’ two business units – Surgery Center Holdings and Symbion – the company’s holding nearly $1.8 billion in long-term debt. That’s greater than the combined revenues of both entities.

2) Thin margins. In the past few years, Surgery Partners has largely been operating in the red. That’s thanks to its acquisitions, but it’s also due to fierce competition in the healthcare space. Surgery Center Holdings “more than doubled revenue from 2011 to 2014, exceeding $400 million,” per Fool.com. “But across that stretch it was positive on the bottom line only once, and posted an attributable net loss of $66 million last year. As for Symbion, in its last stand-alone fiscal year (2013) its revenue grew by 9% annually (to $536 million), but attributable net loss dipped to almost $13 million.”

Fool.com points out one of Surgery Partners’ competitors, AmSurg (NASDAQ:AMSG), demonstrated a similar pattern over past few years: substantial revenue growth and very thin top-line growth.

3) Regulatory risk. Government regulations are increasingly worrisome for healthcare companies – a risk Surgery Partners is well aware of. “The amount that we receive in payment for our services may be adversely affected by market and cost factors that we do not control, including Medicare, Medicaid and state regulation changes, cost containment decisions and changes in reimbursement schedules of payors, legislative changes, refinements to the Medicare Ambulatory Surgery Center payment system and refinements made by CMS to Medicare’s reimbursement policies. For instance, cuts to the federal budget caused a 2.0% reduction in Medicare provider payments in 2013.”

DISCLOSURE: I do not have a position in SGRY, and I do not plan to initiate one in the next 72 hours.

Photo credit: Adam Ciesielski

How Audi bested Tesla

Remember this name: the Audi R8 e-tron. It’s the first electric car to outdo Tesla’s Roadster and Model S with a 280-mile range (that beats Tesla’s Model S by 10 miles or 3.7 percent).

Let’s get this out of the way: the R8 won’t directly compete with Tesla’s cars. For one thing, it’ll likely cost more than twice as much as the Model S with some analysts expecting a $200,000 sticker price. Sales will also be via special-order fulfillment only. Still, the e-tron’s a warning shot that should have Tesla investors nervous. Audi’s serious about capturing electric-car market share. They’re even taking a page out of Tesla’s playbook by first launching a supercar (comparable to the Tesla Roadster), which will help them fine-tune their technology.

Powered by a 92kWh t-shaped lithium-ion battery pack, the Audi has a higher top speed than the Model S (155 mph versus 130, though both are electronically limited) and a much faster charge time. Audi also claims the e-tron can charge in “significantly less than two hours.” That’s phenomenal considering standard charge time for the Model S can take more than 9 hours with a 240-volt outlet (superchargers are, of course, faster).

The Model S may have a slight edge in acceleration, though we don’t have an exact comparison. Published numbers say the Audi can run from 0-62 mph in 3.9 seconds. The Model S can do 0-60 in 3.2-seconds.

The most exciting part of the announcement is this: Audi’s e-tron will be a “mobile high-tech laboratory” (source). The company’s using the supercar as a test bed to push the envelope. They’ll take what they learn to develop and launch a fleet of sedans and other Tesla competitors.

Interestingly, Tesla and Audi have similar market caps. Tesla’s worth $24.38 billion vs. Audi’s $29.58 billion. The difference is the fact that Audi’s actually profitable. The German automaker’s trading at a P/E ratio of 7.12 while Tesla’s burning through as much as $300 million per quarter.

This is just the beginning of a global war. Electric car technology will change everything about transportation and that means we’re going to see a whole lot of other competitors come to market. In many ways, it reminds me of the tech bubble in the 2000s. There’s just so much potential in the space that investors can’t help but get excited. Just remember that the sexiest companies don’t prevail. The company’s that do are the companies that know how to execute and make money. Audi’s already proven it can do both.

Want proof we’re in a bubble? Look to Tesla

Tesla Motors Inc. (NASDAQ:TSLA) had revenue of $956 million last quarter. That doesn’t sound bad until you consider the company’s operating expenses of $1.031 billion. Tesla’s burning through cash, but shares in the electric car-maker are still holding onto a $24 billion market cap.

That’s stoked fire under David Stockman, Former Director of the government’s Office of Management and Budget. Tesla, he says, is “a crony capitalist con job that has long been insolvent and has survived only by dint of prodigious taxpayer subsidies and billions of free money from the Fed’s Wall Street casino.”

Continue reading “Want proof we’re in a bubble? Look to Tesla”