Fund Thinks Tesla Motors Inc (TSLA) Shares Will Rally 400% in Next 5 Years

Risk and return

Tesla, as an innovative growth company, could certainly offer ridiculous returns to patient investors — but only if everything goes according to plan. In the future, battery-powered electric vehicles could become the dominant type of car — and if that’s the case, Tesla would obviously be poised to benefit big.

But there’s no guarantee that will happen, or even if that’s the dominant trend. The world’s best selling cars are the Ford Motor Company (NYSE:F) Focus and Toyota Corolla — compact sedans that cost around $15,000. It will be a long time before a battery-powered car can match the value offered by either of those models.

While the traditional internal combustion engine powered by gasoline appears to be in its twilight years, the future may prove to be based on something besides electric — perhaps natural gas?

The recent explosion in natural gas production has brought prices down to absurd levels. Once US-pioneered fracking techniques become more widely used across the globe, the world could find itself drowning in natural gas.

That could mean a future where natural gas-powered vehicles — not battery-powered ones — are dominant.

At any rate, Tesla Motors Inc (NASDAQ:TSLA) remains a high-risk stock at this time, and is certainly not guaranteed to be the next Apple or Google. For short-term traders, playing a Tesla short squeeze might prove profitable. But over the long term, Tesla’s viability remains a gamble.

The article Fund Thinks Tesla Shares Will Rally 400% in Next 5 Years originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

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