About two years ago, "Shark Tank" star Kevin O’Leary couldn't make sense of investing in Tesla Inc (NASDAQ: TSLA)...even though he bought one of the cars and enjoyed driving it. Elon Musk's company was making good cars, but wasn't making money.
Loves the car, but not the stock
"I love the car - now the stock is crazy," O'Leary said during a 2018 talk at Benzinga's headquarters in Detroit. "Why would you pay that multiple for a company that makes no money? ... You can buy a basket of companies right here in Detroit at 11 to 12 times and get a dividend and they're all all over automated cars and battery cars. Or you can pay an infinite multiple for a stock that makes no money. I don't get it."
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Tesla Is Data On Wheels
But after his son got an internship at the company, O'Leary decided to buy some shares. He since has seen a completely new trendline.
"I bought some stock because my son told me it’s not a car company; it’s a data company and every mile that a Tesla drives the resolution of the road data gets better and the company gets more valuable," he said.
Loves the car, and loves the stock
His change of heart couldn't have come at a better time. O'Leary told Benzinga this week, "I was watching CNBC and some analysts [were] dumping on the stock and it was down 13%, so I took a position at $230.10 on 7/25/2019."
Tesla shares now trade near $900, more than triple where they were trading six months ago.
O’Leary's deft trade timing was basically a bottom in the stock. He has had many prescient calls including investing in Plated, one of "Shark Tank's" biggest success stories to date.
O’Leary Likes Companies With Solid Fundamentals
O'Leary, who is also chairman of O'Shares ETFs, got in as Tesla was starting to look like the stocks he likes: those that are fundamentally sound and make money for shareholders. And he got in as the stock was starting a meteoric rise.
"Within six months, the thing is now breaking even, looks cash flow positive in quarter two, so as a result, the market has regraded the stock and it’s up over 30%," O'Leary told CNN in November. "It's turning into a real company that makes money for shareholders."
Tesla's stock closed most recently at $887.06 per share.