Tesla: The Teflon Stock
I lost a fair bit of money shorting Tesla ($TSLA) stock until I realized that its stock price was absolutely untethered to reality. And we see this today as the stock is currently up 4% following yesterday's miserable earning report. The "growth" stock with a P/E ratio of 111 reported its 9th straight quarter of flat revenues and 12th straight quarter of essentially flat to down profits (source CNBC).
There is a nice Cramer cameo in the movie Ironman where he screams "that's a weapons company that doesn't make weapons." Tesla is the growth company that doesn't grow. So of course, without growth, the Tesla stock fans are driving up that triple digit PE even higher
The only explanation seems to be statements from Elon at the earnings unboxing session yesterday:
Musk has been telling investors in recent quarters to focus less on the core business as it exists today and more on a future of autonomy and robotics.
In October, Tesla drummed up excitement among fans by showing off an early prototype version of a Cybercab at its “We, Robot” event. However, Tesla still does not produce robotaxis. Instead, the company sells a premium version of its partially automated driving system called FSD, short for Full Self-Driving (Supervised)....
While Tesla did not give specific guidance for this year, the company said, “we expect the vehicle business to return to growth in 2025.” It also reiterated plans to “unlock an unsupervised FSD option” eventually and said it expects to “begin launching” its driverless ride-hailing business “later this year in parts of the U.S.”
Wow, every CEO should try this after bad results. "Focus less on the business as it is today and more on a vague, unspecified vision of how it might be better in the future." This is the same sort of Musk handwaving we have seen for years. The full-self-driving promise dates well back pre-COVID. Honestly, having seen the state of FSD on Teslas, I fear for the residents of Austin where Musk claims there will be robotaxis in action later this year**. I found this to be the most interesting piece of hopium:
The company’s stock price has rallied sharply since Trump’s victory in November as investors bet that Musk’s influence would lead to both favorable policies and less oversight of his companies.
Seriously? In his first executive orders Trump has killed most of the mandates and subsidies on which the company has relied.
** Footnote: You know where there are lots of robotaxis in action and have been for years? Phoenix. Waymo has become a fixture of the Phoenix and Scottsdale streets. Everyone here loves them. Yesterday I tried to get a picture but I was too late, but near my home there were three waymo's side by side going up the boulevard. Go to any fancy club that attracts a lot of young people, like the bar on the roof of the new Global Ambassador Hotel, and you will see one Waymo after another dropping (mostly) young women off. Women love these things because they feel safer without the driver. I love them because they are about the only thing I see every day that looks like what I was promised about the future when I was a kid. Musk has a long way to go to prove his camera-only sensing approach can match the LIDAR-rich Waymo strategy.
Postscript: I know this will seem crazy, but it is possible to have mixed feelings about an individual: people are not all Mother Theresa or all Hitler. Musk's management of Tesla really irritates me and some things, like his fake Saudi tender offer or the SolarCity buyout, strike me as straight-up fraudulent (how many solar roofs were sold last quarter, Tesla?) But I love everything that SpaceX is doing and I think Musk has done great work shining the light on certain issues from government waste to grooming gang coverup in the UK.
I was discussing the subsidy axe with a friend the other day. It could be a huge win for Tesla and Musk IF (and it's a huge IF) he can really deliver on fully autonomous driving.
The reason is simple: how much does it cost to put the driver interface (steering wheel, pedals, shifters, knobs, lights, dials, linkages, etc) into a car? Certainly not $7,500 in most vehicles, but it's probably a decent chunk of that amount.
Fully autonomous driving is the real "killer app" for EVs, not environmentalism. Whoever gets to sell a reasonably solid (ie, better than an average human driver) version of this is going to be selling iPhones while the rest of the industry is stuck with Blackberries and flip phones, plus a very significant COGS advantage that can let him underprice his direct competition.
Musk has a long history of overpromising, so we'll see if he can deliver this time. I have no stock positions on Tesla either way, so to me it's just free entertainment.
I do think Tesla will reach this point ahead of everyone else: consider the absolute ridiculous advantage they have with the quantity of training data and the AI horsepower to train with it.
Have you driven a Full Self Driving Tesla? I have read your blog for years and am happy to see you back at it. But you clearly don't understand Tesla. This will be the most valuable company in the world very soon. It is years ahead on autonomous driving and robots. Consider watching a few videos from Solving the Money Problem on Youtube to understand.
I just read your whole post. I have two Teslas, with a combined 12,000 miles of self driving since the release of 13.2 a few months ago. Neither my wife, or I, or any family member would ever purchase another vehicle that is not self driving.
I have three phones mounted on my windshield where the camera that watches me can't see them. I read, watch videos, and write blog comments as I go up and down the canyons of Utah to ski almost everyday with the most valuable cargo ever, our grandchildren. I have never had any safely related reason to intervene short of a complete whiteout one day in a blizzard.
I am retired and our savings have tripled in the last year as my wife and I moved most of our savings into Tesla after taking an FSD test drive last April.
No one who understands Tesla has any problem with a slow quarter. Tesla is not focused on any quarter, it is rightfully focused on the future, which includes autonomy, and they are the best A! investment in the world, because their AI is tied to physical products where they have world class cost advantages, with robots making robots. LLM's will no have high profits as long as they are purely software, as the competition destroy the possibility of long term profits.
Elon is a god. Not God, but a god. A god is someone who puts the interests of humanity above his personal interest. Because he does that, God rewards him.