carguyny wrote:Tesla's share price is propped up by Owners turned "Investors" who are convinced the product is so great the company can't fail.
That is unlikely to be true? Tesla has a market cap more than either of the 2 leading US car companies. Most of the shareholders will be institutional investors? There cannot be that many fund managers in New York and Boston who so love the car, that they have driven the share price to this level. Let alone in Europe or Asia.
Tesla has sold fewer than 200k cars in total? How much stock would those owners have bought? And of course once they've bought, they are no longer marginal buyers, so they can't drive the share price up further.
Note Tesla always has a very high level of short interest-- there's a lot of hedge funds who hate this one.
The "hype bubble" is there, and the fan base. But it's at best a second order effect in driving the share price. What I think his happening is a bit like tech got in 1999-- everybody was afraid to get off the escalator. It's also one of the few pure plays on the "even newer economy". I mean one can buy Dong Energy (wind power) or GE (all sorts of new energy, but buried in a huge conglomerate), but pure plays (especially on Electric Vehicles, self guiding vehicle technology) are few and far between amongst listed companies.
I suspect what happens is the momentum crowd is following this one so the price rises have become self fulfilling-- these are institutional investors and hedge funds. The cheering from individual shareholders I suspect only a secondary factor.
Tesla has a lot of challenges coming at it, off the top of my head, so there might be some inaccuracies:
1) Competing products across the whole spectrum of the market (Take a look at Mercedes new Battery/Fuel Cell combination SUV as an example)
2) Unknown risk of car Residual Values/Buyback guarantees on the balance sheet
3) Continued access to capital to keep building production capacity
4) Unproven Business model and difficult path growing Energy Business
5) Execution ramp and continued problems there
6) Not developing currently deployed self-driving technology (owned by Mobileye who has a Partnership with BMW and Intel going forward) and delays in developing own in-house solution (sold as Enhanced Autopilot and Self Driving).
7) Self driving solutions from Mercedes, BMW, Google are already of the same or better standard
8) Aging infrastructure - the current superchargers are half the speed of what others are about to start to roll out
These are just what comes to mind in a few minutes, I'm sure there are more if I focus on it.
I don't have a position in Tesla now other than marketweight, I have shorted it a few times in the past with success.
Ahh the market can remain irrational longer than you can remain solvent ...
I think the stock is priced for perfection in execution-- only way to justify the valuation. And the industry incumbents are not asleep at the switch - e.g. BMW's efforts.
My analogy is Amazon in 1999. It could be Musk is another Bezos-- he has that megalomaniacal streak that you need to dominate a new industry. And Amazon was priced for perfection, and it executed. But it wouldn't have felt that way say 2000-06 (or later?). Tesla has a lot less ability to reposition and redirect itself in the way that Amazon has done with blinding rapidity in the last 17 years.
EVs are a thing, and I think what has become clear in the last 5 years is they are going to be A Big Thing*. Really only hydrogen fuel cell technology offers a solution to the same problems-- and the predominant means currently for making hydrogen (i.e. from Natural Gas) is not clean and hydrogen fuel cell vehicles are a long way behind. Maybe there is some other technology out there I don't know about, but we will have zero emission cars and we can have zero emission electricity generation-- so EVs are a big potential part of the way out of the box.
But just as The Internets turned out to be big, and bigger probably than consensus foresaw in say 1998 or even 2000, the winners are not obvious. In 2000 you had leading internet companies like AOL, Yahoo, Netscape (can't remember when it was taken over), ICG (?)-- B to B ecommerce companies name escapes me... Google, Alibaba, Apple (as an Internet company) just weren't on the radar.
* I have seen a couple of Teslas in London (in fact a friend of mine had one of the first ones), but BMW i3s are very much in evidence. And I saw a Tesla in the Austrian Alps. London will go to zero emission vehicles sometime in the next 20 years**, we have the worst urban air pollution in Europe. It's happening.
** UK government says all new cars post 2040 will be electric or hybrid electric or other (zero emission). We shall see how it plays out, but it is playing out.