Tesla Could Be A Good Buy Despite Being Above $240: Here's Why

Shares of Tesla Motors Inc TSLA have fallen more than 11.6 percent since July 20. Now trading below $243, Trip Chowdhry of Global Equities Research asks: Is a good entry point open?

In an email sent to investors last Friday, the expert said he thinks Tesla is a good buy at current stock prices ($242 at the time of the report). However, he warned, the shares “will continue to be volatile, with an upward bias.”

Consequently, the firm maintains its 12–18 months price target of $385. The target is based on a 5.4x multiple for the fiscal 2016 revenue estimate of $9.11 billion.

Related Link: Tesla's Batteries Could Fund Its Car Production Efforts

The Trends

Chowdhry assured that the market is getting close to the high-end of the Social Networking and e-commerce boom. The firm foresees only a few IPOs remaining in the industry (Pinterest, SnapChat, SnapDeal and Flipkart).

These IPOs “will mark the peak of these companies too,” just like in Alibaba Group Holding Ltd BABA’s case. From there on, they will all go downhill – similarly to Twitter Inc TWTR, Groupon Inc GRPN and Zynga Inc ZNGA, among others.

“As it has been in the past, the public markets will again bail out the private investors and lose money,” the expert concluded.

Going forward, however, the firm sees Google Inc GOOGL GOOG and Apple Inc. AAPL “redefining the Transportation Industry.” He noted, “This Industry may become a Stronger trend over the years replacing the current trend of Social/Internet.”

Google, Apple and Tesla all have stealth initiatives in the auto segment, the expert added, noting that “innovation had accelerated in Autonomous driving, Human-Car Interface, Power Trains, Power Systems, Material Science and associated Business models and ecosystems etc.”

To close, Chowdhry highlighted that “this new industry will not be a zero-sum game anytime for the next 10 to 15 years.” Furthermore, the firm’s research suggests that the three companies named above will successfully create and own a part of this transportation market, which could reach $1 trillion in value.