My article on Tesla was published on Seeking Alpha two weeks ago and since I was away on vacation I didn’t have time to publish it on the blog. This article can be seen as a companion to the podcast I did, The Intelligent Investing Podcast with Eric Schleien.
We talked about the most hated or loved stock in America: Tesla. Elon Musk and Tesla are a very polarizing topic. The most hardcore short-sellers believe that Tesla is a fraud, Elon Musk is a conman, and the stock is worth less than zero. Fanboys believe in Elon Musk’s mission of transitioning the world to sustainable energy and will have become one of the most valuable and successful companies in the world. Both camps are deeply entrenched in their position and it’s very interesting to see them go at it. I also published a companion to the podcast on Seeking Alpha; Tesla: Bulls vs. Bears.
The podcast was recorded three weeks ago. When Tesla is the subject matter, a lot can happen in two weeks. Tesla, the drama filled company that gets TMZ style coverage, is one of the main reasons why I stay away from the stock. Even though the shorts have a very compelling investment thesis, the market seems to think otherwise. Tesla currently trades at $375 a share. When the article and podcast was published Tesla traded at $300. Seemingly out of the blue, Elon Musk proclaimed that he might pull his money-losing Tesla off the market for $420 a share! He also claimed that he has funding secured. This story is not over.
Here’s the SA Article. The full article is available on Seeking Alpha.
Tesla: Bulls Vs. Bears
By Brian Langis
- Elon Musk and Tesla are a very polarizing topic. Tesla may be the most hated or loved stock in America.
- Tesla comes with a lot of noise and buzz. Facts, figures, and claims are exaggerated, spun, and manipulated to one’s interest or to simply distract from the real issue.
- I have front row seats to a good heavyweight fight between Tesla bulls and bears.
- It’s not the first time Tesla faces an existential crisis.
I had the pleasure to be back on The Intelligent Investing Podcast with Eric Schleien to have an in-depth conversation on Tesla (TSLA). If you are even reading this, you are fully aware that Tesla has turned into a full blown soap opera. The podcast and this following article try to make sense of the Tesla drama.
Since Tesla is a very polarizing topic, let’s start off with the disclosures regarding Tesla:
I’m not a shareholder and never was. I’m not a short-seller and never was. I don’t have an agenda. I don’t have a horse between the short-sellers and the bulls. I’m not a “hater” or a “fanboy”. I don’t have a secret source inside Tesla’s factories. I didn’t pay anybody for information. I don’t own a Tesla. I find the debate between the Tesla bulls and bears very interesting.
Bloomberg Headline ( Link)
I long hesitated writing an article on Tesla. I wrote short one back in January 2014. Tesla is one of the most popular (or unpopular) stocks on Seeking Alpha and the media. There are a couple of pieces published every day and it wasn’t clear at first how I could add value to the debate. It’s has all the ingredients for a juicy story. The combination of a very colorful CEO on a mission to save the world, a flashy company that is disrupting the auto and energy industry, and with billions of dollars at play makes this stock very emotionally divisive. Musk and Tesla comes with a lot of noise and buzz. Facts, figures, and claims are exaggerated, spun, and manipulated to one’s interest or to simply distract from the real issue. And I think this is where the opportunity is. With so much being said, it’s hard to see the forest for the trees. We need to take a step back and get a little perspective. I will write about the good and the bad. While the goal of this article is to provide clarity, I’m aware that this article won’t change people’s mind since folks with money on the line are deeply entrenched in their position. I haven’t seen a bull turned bear on Tesla or vice versa.
I have front row seats to a good heavyweight fight between Tesla bulls and bears. These two opponents have very opposite points of view. In one corner, we have the bulls, aka the fanboys. The fanboys are “believers”. They believe in Musk and that Tesla will achieved its mission of transitioning the world to sustainable energy and will have become one of the most valuable and successful companies in the world. The legacy car companies like GM and Toyota are dinosaurs that won’t be able to compete with Tesla because of its EV head start and superior technology. Musk has also talked about turning humans into an interplanetary species. He makes you dream. In the other corner, we have the bears, aka the “haters”. The extreme version of the bear thesis is that Musk is a straight up fraud and Tesla is going to bankrupt. The milder version of the bear thesis is that Tesla is overvalued and a correction is due.
I try hard to look at Tesla from a rational and objective point of view and this is a difficult task. I also suffer from my own biases. From the outset I’m a fan of Elon Musk but skeptical about investing with him. I’m a fan for what Elon has accomplished and tries to accomplish. I’m a skeptic because I’m not into fairy tale stories and I understand basic high school math. But whether you like Elon or not, his journey from his youth to present day is very interesting and inspiring. Ashlee Vance’s biography of Elon Musk is an excellent book that covers his journey. Of course Musk is a flawed individual. He has personal foibles and challenges as everyone else.
Let’s try to cut to through the clutter and noise.