Sell the house, sell the kids, buy Tesla
The world's smartest person and greatest entrepreneur in history (Boring Company, Hyperloop, Neuralink, Space X, Tesla, and now a re-engineered Twitter) will win out.
I could be way wrong in the short term as a disappointing first quarter of 2023 is likely in the offing due to COVID-related slowdowns in China, but in fifteen years of investing, I have never seen a buying opportunity quite like Tesla (ticker: TSLA). This insanely efficient, innovative, and massively expanding electric vehicle/robot/battery leviathan is down 72% from its all-time highs, driven mainly by the misunderstood behavior of disruptive founder Elon Musk and a rising rate environment that is slowing demand for luxury cars more broadly and forcing nervous investors away from stocks into cash.
Let me note up front that I support Mr. Musks’s moves at his newly bought social media play toy Twitter, including his moves to cull the Woke censorious herd and rightly redirect this potential trillion-dollar X app (think WeChat) towards innovation and profit. It was vital to the integrity of American political life for Musk to reveal, in his “Twitter Files,” the Democratic National Committee (DNC) and Department of Justice (DOJ) corruption and collusion around the 2020 election. The media, who are complicit in RussiaGate, FISAgate, HunterGate, and other DNC and DOJ misdeeds––including the grotesque, cynical dissemination of the DNC-concocted Steele Dossier lies––have been reflexively piling on Musk with sick schadenfreude, driving Tesla’s share price down, to the delight of the DNC's hedge fund donors who seek a better entry point. But the media will eventually tire of making Musk its new bogeyman and return full-time to their true deranged obsession, Donald J. Trump, as the U.S. 2024 presidential election draws near. As they do, Tesla’s shares will start to recover, as Musk’s role at Twitter transitions away from CEO, free-speech enabler, and general bone-picker to his chief enterprise value as overseer of software and servers.
While the media-amplified noise around Twitter has massively hurt Tesla’s stock in the near term, the iconic multi-dimensional nature of Tesla will rescue the stock in the long term, especially now that Musk has announced he is done selling Tesla shares to pay for his Twitter purchase. But you will not grasp Tesla’s value if you only view it as a car company. If it is only a car company, then its price-to-earnings ratio remains unsustainably greater than its automotive peers.
But what the financial entertainment class on CNBC and Bloomberg do not fully grasp is that Tesla is hardly a car company at all. Tesla is a tech company for whom cars are a loss leader, driving data acquisition toward an autonomous driving future far beyond its namesake products. Tesla is also a robotics and AI company, as its cutting-edge innovations in manufacturing create new profit centers under the Tesla umbrella.
Tesla is also an energy concern. The company made most of its profits, heretofore, selling pollution tax credits. Going forward, as the owner of the world’s only true supercharging network, it will crush the competition, especially as Biden's Inflation Reduction Act boondoggle massively propels Tesla's electric vehicle (EV) network build-out.
The biggest issue for EVs is range and reliability. Tesla is far ahead of the mediocre competition on both counts. No matter how much they hate the man for exposing their party’s misdeeds, Democrats are not going to buy an inferior EV––whether it be a Lucid, Rivian, Ford, or GM––out of perverse self-defeating political payback. And buyers in Asia, Europe, South America, and Africa care far less about Musk's political antics than the Beltway leftist mafia wants them to care. With the totalitarian Chinese Communist Party (CCP) as your nearest comparison, do you honestly think Chinese buyers care about any of this US domestic political nonsense? So omnipresent is the CCP’s surveillance state, they probably know little of Musk’s Twitter headaches anyway. Buyers in far more conservative Eastern Europe likely applaud Musk's Twitter moves. And being seen as an arrogant, eccentric tech nerd is by no means a delimiter. Facebook's valuation continued to rise even as negative portrayals of its creepy quirky amoral founder rose in turn.
I think, once again, the world's smartest person and greatest entrepreneur––Boring Company, Hyperloop, Neuralink, Space X, Tesla, and now a re-engineered Twitter––will win out. As we have seen several times before with this Jobs-like wunderkind, the Musk imprimatur will ultimately get priced back into the stock: shorts will be forced to cover, Musk will be assailed as the comeback kid, and you will double your money by 2025 if not sooner.
Sell the house, sell the kids, buy Tesla.