I can’t believe how quickly Tesla stock has risen in the past few months. And yet again, I’m mentally kicking myself for not getting in on at least a little bit of those gains. Especially because I was really on top of it, back when the initial mini-crash happened due to the COVID stuff. Even though the financials didn’t make sense, there were plenty of reasons to believe that it was worth purchasing. And when I say the financials didn’t make sense, I’m mainly talking about their valuation versus former profitability, potential future profits, etc. But when it comes to those things, there aren’t many stocks that are trading in a way that makes sense… at least compared to how traditional stock ratings used to be thought of and traded on.
(I mean, right now Tesla is worth more than Chrysler, Porsche, Lamborghini, GM, Audi, Jeep, Fiat, Dodge, Ford, and Volkswagen COMBINED – while having a 2020 Q2 profit of only $100M. It’s fucking nuts… heh)
I’ve been thinking about it more, and I’m starting to think that I have to trust my gut and research when it comes to these things sometimes. It’s not that I have an all-encompassing knowledge of the stock market and believe that I’ll always know what’s best… but there have been times where I did know way more about a company than the general public, and knew enough to know that I should buy – even if I didn’t buy.
There have been several times where I could and should have gotten in on a company before it took off, and in all these cases I even talked about that fact with friends and family, even if just in passing. But there have been cases where I should have taken my own advice, but ended up missing the boat. eBay, PayPal, Netflix, NVidia, BitCoin, and now Tesla. It wasn’t even that I “knew” before the general public started getting a scent from these things, where it really would have felt as much like “guessing” as actually having confidence… but my urge to buy any of those stocks was early enough to have experienced the bulk of their gains.
I bet that even if I did make a purchase of any of those stocks back when it would have been super beneficial to do so, I bet I’d still be sitting here kicking myself for not buying more than what I did. You’re always gonna have that 20/20 hindsight thing nagging at you. But I think that’s where I need to start, if/when I spot the next one… with a small purchase that will leave me feeling annoyed that I didn’t buy more. Because there was one stock which I was pretty darn sure of, 3DFX Interactive, which totally shit the bed a couple years later – before the company was bought out by NVidia.
And I’ll go on record now saying that Tesla is still way, way overvalued – and even if there is a second crash that brings down market prices across the board, there’s a good chance that Tesla won’t recover in a way where their insane rise continues as it has been. Say what you will about “feeling” and investments, it still eventually comes down to profits… and Tesla is going to struggle to ever make money that would justify their share price. Granted, it’s not just the car company under their ticker symbol, but it’s a big part of it – and while they’ve got the EV market cornered right now, it’s not gonna stay that way.
As more auto makers bring EV cars to the market, the more that all of the operations mature, the more people will recognize that Tesla isn’t this untouchable leader in auto manufacturing. The same way Kia and Hyundai caused a disruption to the American and Japanese auto industry, by bringing cheaper / more affordable cars with similar abilities and specs to the market, legacy auto makers are going to bring “good enough” EVs to market in bigger numbers… and lots of folks will decide they don’t need all of the Tesla “bells and whistles” as long as they can get an EV with decent tech and similar range.
It’ll take still probably take a long while before Tesla falls off, mainly because the other big part of their company is battery tech… so even if car sales are affected by other companies’ eventual offerings, there’s a good chance that they’ll licence their tech, batteries, motors, etc to those other auto makers – keeping money coming in, even if car sales numbers fade. Meh, I could ramble on this for a while, but basically I’m just saying that the ideal initial run up where people make the crazy money… I think we’ve already seen it come and go, and especially with the stock split, I think it’s going to enter the phase of “normal” gains or losses pretty soon… although we should still keep an eye on the battery side of the company, where significant technological milestones could be met and surpassed. (And in that case, it’s almost unfortunate that “TSLA” is saddled with its car company component, which may end up holding it back vs if “Telsa Automotive” and “Tesla Battery” were two separate entities.)
A few more things re: Tesla. They still have some big things coming up that should provide several upward bumps to their stock price. Two things that are definitely going to happen are the CyberTruck and the electric Semi. CyberTruck is polarizing, but when it comes to price vs performance, it’s gonna stomp any other electric pickup that comes out in the near future. I don’t know enough about the electric Semi to know how many waves it’s going to make in that sector, but transportation / hauling is a huge (and somewhat invisible, to normal shlubs) market that Tesla could lock down for many years.
Some things that might happen in the next five years are a subcompact Tesla hatchback, and then the possibility of full self-driving. If Tesla can sell a basic hatchback for under $30k, with advancements likely allowing ridiculous good range and decent tech, that’s another segment that they could own. There’d be little reason to buy an ICE version if the EV version costs the same. Not only would folks with moderate incomes be able to consider one, but then all of the countries with their itty bitty roads or high congestion traffic areas… that type of car would be ideal for them. But full self-driving in the next few years? It’s hard to say how realistic that is. But if Tesla can pull it off, imagine what a paradigm shift that would be. One of those “we’re living in the future” moments, and one who’s affect on the stock value is hard to even guess.
So, yeah, as you can see, it’s not like my chub for Tesla has gone away. It’s just that car companies and battery companies, both, are slowly going to catch up with what they are doing… and when that happens, Tesla better hope that they have something that the other guys still don’t. And with their manufacturing quality being pretty shit compared to other auto makers, it’s ain’t gonna be that.
Meh, okay, I wanna go do some more research…