Confessions of a Tesla Analyst [Video]

When Tesla Motors [NASDAQ: TSLA] announces their quarterly earnings, a ceremonious conference call is always held with CEO Elon Musk making colorful, bold, and insightful comments. Questions come in from Wall Street analysts probing to find out what's really behind the numbers. As a TSLA stockholder, I've listened in on every quarterly conference call over the past few years. There was always one analyst who seemed to ask the smartest question. Her name was Andrea James. 

Source: Andrea James

I wasn't the only one who had this opinion. On investor forums, James was well regarded for her salient analysis on Tesla. However, she announced, back in May, "for the first time in 21 quarters, I will not be on the [quarterly earnings] call asking Elon Musk and crew a question." Although she's left her post as a Vice President, Senior Research Analyst covering Tesla at Dougherty & Company, one esteemed forum member (TMC handle: DaveT) tracked her down for a wide-ranging interview. Dave also sends out one of my favorite Tesla investor newsletters, Tesla Weekly. Although James was a regular on Bloomberg and CNBC answering questions on Tesla, this would be her first time discussing the company as a "non-analyst" free to give her personal views.

Source: Andrea James (via Bloomberg)

The interview was fascinating. Initially James and her firm, Dougherty & Company, had a negative bias on Tesla. However, a probing 2010 phone call with (then Tesla partner) Daimler revealed that Tesla had technology, according to Mercedes executives, that no one else had — that call began to change her assumptions on the company. Soon after, Dougherty & Company became the only Wall Street firm with a "Buy" rating on Tesla in the early days. Around that time, James' counterpart at Dougherty & Company, Jeff Evanson, left the firm and actually went on to become Tesla's VP of Global Investor Relations. 

Image: DC Inno

James explains that Tesla has a "culture of iterative learning” which attracts the best talent. She was even allowed on the infamous secretive second floor of Tesla's factory which is off-limits to all who tour the factory. It was during that factory tour that James came to understand the "5-year" competitive lead in battery technology that Tesla really had — and given her unique background in computer science and physics, she began to piece together an informed, in-depth perspective of Tesla Motors that differed from others. How different? When Tesla passed a $100 share price she boldly raised Tesla's price target to $200. At that time, she was an outlier. Looking back, she was the only analyst to predict so much growth, so early on.

Image: Startup Network

James was pregnant during her first Tesla Model S test drive with her husband. In fact, the baby was due in less than a week. After her husband floored it, Andrea felt like she was in a rollercoaster. It turns out, she went into labor that night. Covering Tesla's stock was also akin to a rollercoaster ride. Yet, she remarked that Wall Street kept (stubbornly) asking what could go wrong with Tesla. But, when the Model S won Motor Trend's Car of the Year award, Wall Street started asking, instead, what could go right? Suddenly, she wasn't the only analyst bullish on the stock.

Source: Andrea James

Check out the interview (see below) to hear James' thoughts on Model X production, Model 3 predictions, the SolarCity merger, and Musk's Master Plan. From her discussions with Elon Musk and JB Straubel to small suppliers and a local bartender near Tesla's factory, she reveals how she was able to create a "mosaic" in order to distill insights about the company. Most intriguing is James' four-point criteria for evaluating Tesla. Here's the full interview...

Source: Dave L

And, although James no longer gets her 15 minutes with Tesla senior management to privately discuss the company's financials (after that quarterly conference call), she still follows the company quite closely. So is James still positive on Tesla? Well, she's put her hard-earned pay into a Model X reservation for herself. After leaving the firm, she concluded: "Does Tesla have a technology lead that is real? Can Tesla build it? Will people come? Yes, yes and yes." And, now that she's longer an analyst, she invested her personal funds and, yes... she bought Tesla stock.