I Wrote This in 2015 About Tesla

I am sharing this here only so that I can remember how hard it is to hold on to a great idea or investment throughout life. I had followed and covered Tesla early in my career and loved it. For one reason or another, I never held on even despite writing this 10+ years ago. Well, this is for my own memory and today, before the split, Tesla is trading over $6,000 per share – target hit.

Why Tesla Will Trade Above 3,000 Per Share (2015)

Elon Musk and Tesla have accomplish something very few other comoani s in Bistro have accomplished. They’ve managed to create a story the entire world is paying attention to. You may never see another story like is in your lifetime.

Only a few other people in history have enjoyed success to this magnitude. I think of Edison or Franklin or even Jobs or Gates. Welcome to the books, Musk. The difference here, howveever, is that Musk is dosing something none of the others have dared to do.

He’s outspoken.

He talks freely.

He takes chances.

He does weird things.

He does things that are borderline insane.

But he’s human. The man tweets. I wish more people tweeted like him. It’s an open canvas. Share it with the world. As more information becomes digital and public we have no other choice but to pour it all on paper. Sometimes that means even the deepest and most random thoughts you have.

I believe we recently lived in a society governed by TV and magazines. In the 80s, 90s, the message was sent to you. It was not a two way conversation. You had to see the perfect model on the cover. You had to read about the popular or the successful. This in turned created a geneeeation of people bottling up their emptions. Always trying f to compete with the perfect they saw being said to them on TVs or magazines. They had no idea they could speak back or speak up.

Today that ability is presented to you. Let it out. Have fun. Be an artists. Free association.

Whether he knows it or not, Musk is in this. Follow his Twitter feed to see what I mean.

But now to his stock.

It is quite possibly the most confusing and overvalued stock in history. I think on the surface it looks awful.

Wtf a ps ratio of that?

Wtf it’s valued at that price per car when ford and GM are valued at that?

Wtf it has barely enough money to succeed another three quarters?

Wtf they burn a lot of cash?

Wtf they can’t fulfill the demand for their cars?

These are all surface level questions. Everyone can see this. Often when everyone can see it, it’s because those who control what you see don’t care. I think you have a valued point if you bring up the above questions about valuation and overvaluation. I think many people have studied Buffett and value investors professionals and have learned to realize that this is not a valid company.

But when Edison founded GE it was in a precarious situation. We saw how that turned out. Here are some headlines I found. Value investors are great, but your information isn’t unique and it isn’t a perfect formula. If it was a perfect formula, we would have far more Buffett’s in this world than just one. Sometimes, it does not work.

So let’s get to Tesla’s valuation and what I see. It’s why I own $600 calls expiring in January 2020. That’s how I’m long. I’m either going watch my theory and understanding explode through way OTM calls on Tesla or it will decay or it will simply be a losing bet. You can read this post and decide where you think I should stand. So to start, I want to introduce you to all the things Tesla has that NO ONE is paying attention.

Most people say Tesla is a car company. I am about to scare the living shit out of you. It’s so much more than that. Break out these core components:

Tesla has its own operating system (Yes not Google or Apple):

Tesla is the world’s biggest electric battery producer:

Tesla is now building its own chips to compete with NVIDIA:

Tesla leads the way in energy storage and delivery:

Tesla has a solar that’s building industrial sized solar plants:

Tesla has a solar residential unit that builds components for roofs:

Tesla has a network of charging stations across the world:

Tesla has a mapping system:

Tesla leads the way in autonomous vehicles:

Tesla is also a car manufacturer.

I want you to think of all car manufacturers and what they have. Very few if not any have anything even remotely close to this. Legacy car makers were efficient and they did well. But they are behind. Tesla is building off their mistakes whereas these companies now need to reorganize and restructure to catch up.

Tesla has its own operating system. Tesla has the best battery plant in the world. Tesla is building its own AI chips. I don’t want to sound insane but seriously – what’s stopping Tesla from building a smartphone next? Or a computer?

Tesla started with the car. Tesla has built the most advanced manufacturing system we’ve seen on planet earth. They build cars. From here they can push down. If you can build a car in a massive complex assembly line what’s stopping you building computers or phones with a similar process and sourced with all the most core compentns you already own in house or are experts at sourcing for Tesla cars.

Imagine the amount of scrap Tesla has. They could build phone cases made with the premium casing they use on their cars or their computer. Being fully integrated isn’t connecting your computer to your phone. It starts now with your car to your phone to your home to your computer. Weirdly enough it’s possible Tesla frog leaped Apple and they did it entirely by mistake.

The most interesting thing I am in is the aspect that both Google and Apple are working on autonomous car networks. Sure it’s a lucrative business. But it seems possible that they release Tesla is the single biggest threat to them.

Ask yourself, who else could frog leap them like this?

So that’s the complement business aspect and also the strategic component. It’s fascinating.

The CEO of Ark Invest has a great letter out about Tesla. Her theory and mine are similar in the aspect of Tesla’s valuation but she believes Tesla will make most of its money in autonomous vehicles and driving. I like this. She might be on to something. But I believe I am looking even deeper than she is. This is where it’s at.

Tesla is a $100 billion company. Potentially even a trillion dollar company. And it’s that because it is the biggest threat to all the current winners. I want you to even think about Amazon. Bezos is later focused on delivery and efficient packaging. What will he do when Tesla owns a fleet of autonomous vehicles traveling without oil at an efficient cost he can’t match picking up and delivering products based entirely on a computer network?

Yep.

If this works, Musk and Tesla will have them all cornered. He will win. This will be the most epic blog post you’ve ever read.

If I am wrong, and Tesla does go bankrupt, I will admit I lost. You can remind me all the time on Twitter if it makes you happy. But we are species who likes to bet on the future. I am willing to take this bet. And if it’s wrong, I will keep searching for another. Currently my Tesla position is about 1% of my portfolio and it’s all through long OTM options. I’m not here to give money or investment advice so don’t take that this way. I would say, though, that if you want to play Tesla the best way is through a very small percentage of money and on a big bet down or up. This will crack at some point because of financial stress which I missed or it will indeed take off to the moon because of its unique position. If my calls hit, and this rockets in the next 500 days, damn I will be lucky.