MARCH 7, 2020.
Link to the Real. It Pays.
are power. Back in 1969 the Saturn 5 boosted the Apollo Program into our collective imagination. That summer cars were personal and SRBs tumbled in silent grace back to Earth. The vision above bloomed for all to see on the bright side of the moon. Vision turned reality.
Space X lands solid rocket boosters upright on the launch pad. That’s different. The sea doesn’t need them. That’s the power of vision. Elon has an EV vision. Musk is a legitimate visionary, and a charismatic lightening rod. Tesla, his EV car company is on the lie detector presently, seeking a true valuation. None exists–not really. The market simply spins one up by the day. Think spinning Twister dial.
Investors believe in Elon’s visions, and Tesla’s future. They cling to Musk’s future with their dollars. That’s nice, and tradeable. Now Tesla is a legitimate phenomenon, busy making a believer of the wider market. It’s not luck when you only build 365 thousand cars annually, yet sport a market cap larger than Ford and GM combined. Riding the wild vision, “Windows Down. Tesla.”
we are once again, markets up and down and everyone busy developing crippling diaper rash until the violence is explained. Oh boy. The explanation is that markets go up, and down. Done. The expert explanations are the same merry-go-round. One real reason resides behind it. No one wants to lose. Money gets freak jumpy. Meanwhile, the smart money does what it always does; takes profits, trims under-preforming or specifcally-vulnerable positions, building cash by both, and waits for the bargains to appear, as prices fall.
When shares are “fully valued” taking some profit is reasonable. When the pressure’s on it makes even more sense. When prices fall, as they always do, buying again is also reasonable. That’s called investing, otherwise it’s just buying. The very best stocks can be played as both a hold and a trade. That’s called “trading around a core position.” 5%-10% up sell a quarter or half. 5%-10% down buy the same back. All the while the underlying 50% just rides.
How can you tell if your CEO’s the real deal? Release a Youtube vid of said smoking dope. Former wework packager Adam Newman tried it and promptly got the bum’s rush at thirty-thousand feet. Elon did it, and by design, and surged onward toward certified gold. Who knew? Teflon. Musk’s Twitter frenzy seems over and perhaps Tesla’s delivery misses too. Fact. The company’s cars are cherished and the stock rises even when the company announces a secondary offering and a recall back-to-back. Teflon-coated gold. Add some serious price volatility and that gold could be yours.
Tesla? Is TSLA a good stock? It’s impossible to value. They can’t hit production targets. Yet they own the air. Tesla proves the rule. Investors set the value of any stock every day. As investors we can profit from the price-setting process. The value of this car maker is unavoidably subjective, and will remain volatile. Is it worth $900? No. Is it worth $400? Yes. Is it a trade here? In our opinion absolutely, below $700.
TSLA one year forecast EPS growth 4093.5%, vs. the 500’s 17.4%. TSLA FY2019 EPS -4.87. 2020 EPS estimate $8.39.(Source, Schwab Center for Financial Research. Calculations based on data sourced from S&P Global.)
“Optimism, pessimism, fuck that. We’re going to make it happen.”–Musk.
Tesla Inc. TSLA: NASDAQ. 3-5-2020.
Musk is a visionary now, one working to become more of a CEO. Rarely are visionaries managers. The tedium of long-term management doesn’t spark visions. However Musk is a charismatic front man of magical attraction. Shareholders are captivated, if not true believers. Just now his car company is becoming an authentic manufacturing reality. The chaos of it’s birth is fading. Future funding feels secure. It’s customers wait with palpable anticipation, and they will pay up for the brand.
We love and depend on fundamentals. But let’s face it. Tesla doesn’t trade on fundamentals. Like our solar system’s gas giants, no solid valuation metric or delivery schedule has ever determined TSLA’s market price for long. Like water in footprints on the beach, the believers flood back following every earnings event. Book value’s fine when evaluating financials, but forget about it for what Cramer’s tagged as a “cult stock.” That’s fair. Earnings growth will increasingly guide TSLA’s price. But much like Amazon, investors will absolutely carry this success story onward, and it’s price upward.
Tesla is expensive any way you slice it. It also radiates all the jaw-dropping promise of Amazon at $400. It’s infinitely more a growth story than a cycle enslaved industrial. Any doubt of that is squashed by a market cap larger than Ford and GM combined. The point? Tesla will grow even in a slowed economy, and travel a million miles up and down on it’s journey to maturity. The vast majority of that will be up and down.
Trading is a form of gambling. But so is investing. One main difference is the amount of time between buying and selling. The other is what you choose to bet on. We only bet/trade quality. We are determined to be happy if left sitting on that trade for a time. But that’s us talking. Many will trade pure junk, just because it moves up and down. We will only trade things we’re willing to keep. That’s because the trading music can stop any minute, and we want a chair worth sitting on just in case. We think TSLA fits that bill. As always good luck and good investing.
Jame of the Day
“What Are You Doing the Rest of Your Life?”