Lots of play in the media these days:
Tesla’s frenzied ride in the capital markets culminated on Monday in the company being the largest entrant ever be included in the S&P 500, the main benchmark stock index.
Tesla’s true believers are not paying for actual performance, but they are betting on Elon Musk as a visionary and the potential upside in the still nascent electric vehicle market.
The merits of that investment thesis diverge greatly from the current state of affairs in the automotive industry, and the broader economy.
BZZT - WRONG!
First let's acknowledge TSLA is driven by a lot of speculators (vs investors), including a lot of millennials & new retail investors, that said there's a lot of legit investors in there to (e.g., Ark, Wedbush, Vanguard, Goldman Sachs, Fidelity, JPMorgan - hilariously, etc), about 42% which is generally the sector (autos) average:
With that, the reason TSLA *INVESTORS* are investing is not necessarily autos - though there's a GIANT growth opportunity there obvs ...
Rather TSLA has at least 5 realistic vectors of revenue:
⑴ BEVs: in-flight, already profitable, no marketing costs, no dealer margin; growing demand, growing profit, falling costs; the Warren Buffett "golden triangle" of a great business
⑵ Consumer Energy: in-flight, profitable for the 1st time in Q3, growing demand, falling costs
⑶ Self-driving capability: in-flight, defined revenue stream, though still in pilot
⑷ Semi-trucks: in-flight, 2021 debut
⑸ Industrial Energy: in-pilot, 3 year successful pilot in Australia, California pilot under construction
BONUS
⑹ Consumer HVAC: rumored, likely prototyped, but no other information
⑺ Auto parts supplier: vendor sales of software, systems, energy, etc
⑻ Super-Charger Network: global install base, revenue from power sales & energy grid storage
⑼ Battery sales: Tesla building some of the largest battery capacity in the world
⑽ Contract auto manufacturing: Tesla has some of the largest BEV manufacturing capacity coming online with patented technology.
Arguably the only 2 companies to ever have such success with so many potential revenue vectors and little to no competition is Amazon and Apple.
Everyone viewing TSLA as an autos company couldn't be more wrong and it continues to be mind-blowing given how many times we've seen this same movie over the last 20 years and it always ends the same way: the startup wins.
The only difference with TSLA is the investors/speculators are AHEAD of market dominance instead of behind it as usual. Remember how Amazon was a no-profit books/CDs retailer with sloth-like fulfilment? Or Apple was dead DEAD!
I do.