I am a law-student (final year - planning postgrad!) and we always try distinguish a moot case or problem question from the established precedence of English law. The established law is “x” and it comes from a line of authorities involving “Y”. Therefore, when we read a case (and have to defend a side) we ask ourselves whether the facts of the case are such that a qualification or distinction can arise. The problem - as I discovered in my second year from a disastrous moot before a judge - is that the human mind can actively look for reasons to satisfy this distinct category and actually convince itself - but, in fact, on a closer dispassionate analysis, there are many more points of convergence and similarity. And that the points of difference are not so material to the broader scheme as we would have thought.
I am not an authority on Tesla. So, I read your comments and I ask myself whether the points you raise are really of a variety that qualifies it as an outlier or exception. Overhauling an assembly process, increase in margins, outsourcing or in-soucrsing production parts, alternative revenue streams, charging networks … From my perspective, and I appreciate that we may see the world differently, I don’t honestly see anything different about Tesla.
It also talks about the general sense of excitement, euphoria & optimism in the new industry which feeds into your comments about “narrative stock, where the story is more important than the financials”.
The problem here is that Tesla isn’t such an anomaly that requires special analysis. It is, in fact, the paradigm classic model of a company in an emerging exciting new industry.
The analysis of Warren Buffett’s that I referred to (which the blog also discussed) is his deep understanding of the flow of capital and the broader changes and developments at different stages of an industry’s maturity leading to the ultimate collapse; and - critically - shareholder value along the way. It goes to show that - contrary to your assertion - Warren Buffet (and probably most value investors) really do have a deep understanding of what drives the Tesla valuation and can indeed rationalise it.
As ever, wish you all the best if you invested in Tesla.
I don’t honestly know if the market is overvalued. I don’t think I am qualified to say and I think most people don’t actually have a clue one-way or the other. We are in new economics. Perhaps out of post-WWII economics, and into a new age of zero interest rates. Who really knows!
Ah, I see his union-busting has finally caught up with him and he’s having a strop, let me fetch the world’s smallest violin. Priceless to hear him complain about public transport subsidies too.
Additionally, Mercedes just got the first level 3 approval in the world in Germany:
Incidentally, same day as their spin off of the trucks business, which should give the standalone similar margins to Tesla, and AD superiority (currently) at a tenth of the enterprise value.
