You see what I have been saying, Tesla has run up about 20% over the last month, that
is huge, and what has the company actually shown for it, basically nothing. We can't
even attribute it to the macros considering the nasdaq is actually down over the same
period. Tesla has shown very little over the last month, yet up 20%. Ok things have happened
over that time. We had the shareholder meeting, and Elon reassured investors he was sticking
around as CEO. He also said that Tesla would try advertising too. And Ford have partnered
with Tesla's superchargers. But Tesla were going to open up all their chargers regardless.
The financials, demand, deliveries, production, margins are all about the same. Tesla's stock
price is not about those things, this is what I have been saying. It's about the confidence
in the story, the mission, or the master plans.
In addition to that we saw Nvidia beat earnings, and the stock sky rocketed to actual all time
highs. Now the market is potentially wondering, well if Nvidia is at all time highs, and they
are going to benefit majorly from the AI bubble, and Nvidia crashed really low at the start
of the year like Tesla, and Tesla is potentially leading the way in AI, then should Tesla run
too?
I mean AI is going to be big, and if Nvidia is now almost a trillion dollar company, then
how much will the company worth that will have AI used in its robots? Again like I say,
are robots and self driving cars going to be the future? If you think so, then there
is no one else close to Tesla, do you realize that? Tesla is the real robotics company,
in hardware, software and data. The barrier to entry to that is likely in the 10s of billions,
with engineers that may not even be available, and probably 5 to 10 years. And that's just
to catch up, by which stage, Tesla would have jumped further ahead again.
I used to be so into what was happening with Tesla in real time, what are the wholesale
numbers for China, how many new Tesla's insured, what is the google trends for the Model Y
this week, how many vehicles are inventory? This is not the way to think, you need to
zoom out, and see the forest for the trees. Yes, Tesla's demand may be less if interest
rates are higher, and the economy is looking weaker. But last year we saw exactly the opposite.
Demand will be cyclical, but the technology will keep improving over any time. Tesla are
not cutting back in R & D, or even production.
It's so easy to get emotional about things that are happening now, especially when it
gets compounded with FUD and a falling stock price. Nowadays, when I start to sense this
environment, or sentiment, then I feel like that means its time to buy. I have even been
testing this by trading some options. 95% of technical analysts lose money, the odds
are stacked against you, and most likely said analysts are smarter and know how to read
charts and indicators better than you or me. So what chances do we have trading?
Basically none, if you are doing the same as everyone else, and the odds are that bad.
So instead I am trading on emotion. Now some people call me a gambler, and yes I am ok
to admit that this is gambling, but even at my peak, I only ever put 10% of my actual
portfolio into trading. I follow this stock a lot, and feel like I know it really well,
which I consider an advantage too. I don't even invest in any other stock, let alone
trade. And at one stage 30% of my holding was in my trading account, but that's because
it had gone up about 600%, compared to the stock price only doubling, due to the leverage
I took on trading. I also don't ever suggest or recommend trading to anyone, and like I
said I am not betting the house on it. I do it for fun more than anything, with money
I can afford to lose. And I know some of you do too.
Anyway, I digressed a little. My point was really the emotion that even investing carries
over relatively short periods. One of my best friends has held bitcoin despite it dropping
90% of its value at one stage. Again, these are the times to be buying, when it feels
this bad. Of course catching the bottom is very difficult especially if something drops
90%, you might have thought it was a good deal when it had dropped 50%. However, Bitcoin
and Tesla are not quite the same.
So what if Tesla's stock price starts to really run, and the market thinks its due to the
future of Robotics and AI? Tesla bubbled before due to EVs, due to 4680 cells ramping up production
and reducing costs. And it looked like there so unlimited demand for Tesla, and all that
ever mattered were production numbers, as every Tesla was pre-sold before it was made.
But this was during times of low interest rates, lots of demand for vehicles, and chip
shortages affecting supply. Tesla was going to the moon. 4680s and the tax credits and
subsidies from the inflation reduction act, looked like Tesla would be able to sell the
Model Y for almost $20,000 less, and still receive the same insane profit margin. And
with the new factories Tesla could more than double supply, which would have been eaten
up by this unlimited demand, and even if Tesla needed to lower prices, there was an enormous
buffer there.
Of course Tesla missed their targets on 4680 and it has to date instead been a failure,
until we actually see some significant ramping. But that's not to say the stock isn't going
to do anything until 4680 is a success. The market isn't done with Tesla, it may look
at it as an AI company next and bubble the stock price again just like it did with EVs.
Next up AI and Robotics are the future, and we may see break throughs in various market
segments, that further validate this. And Tesla will also be making some leaps from
time to time with full self driving and their bot.
If it's looking close, then people will start adding up the numbers again, like they did
for the 4680 cells. If Tesla have this many vehicles paying this much every month for
subscription, then that will be this many billion dollars a year in profit. Wow, these
numbers look amazing. But then if Tesla also license their software to Ford, and probably
any other legacy auto company that is smart enough. Then it will mean their market increases
a massive amount again. Oh and then the robotaxi income too, which gets nutty.
The the stock market starts adding these numbers, and then discounting it relative to the chances
of it occurring. Ok sure, that is currently factored in now, so its more like the market
starts thinking the chances of it occurring soon, are looking more likely, so the weighting
factor increases. Say FSD and Robotaxis are worth something like 5 trillion for arguments
sake, and the market is giving it just a 5% weighting factor currently. Then it's only
adding about 250 billion to the stock price. 5% is not a particularly high likelihood though.
If the chances looked closer to 20%, then that would be 4 times the confidence, which
would thus mean one trillion dollar valuation, and I am just talking about that one side
of the business. There are lots of other sides that have chances to be very profitable for
Tesla too, and they all add up with their own arbitrary weighting index and potential
profits.
I mean lets face it, Robotaxis, despite having insane profit potential, its adding very little
on to the stock price currently today. It feels like a pipe dream to most investors,
its hard for some people to even take seriously. It almost feels like science fiction. But
we don't even know how it will manifest. We have this idea, that suddenly all Tesla will
be available for the Robotaxi fleet overnight. But it may not come to fruition like that.
It may start in certain cities in a certain perimeter, to remove edge cases perhaps. Maybe
up and down the Las Vegas strip might be a good place to start, just as an example.
I know it almost felt like its going to be a while until Tesla even gets back to $200,
but seeing what else is happening in the market, and how some stocks are behaving, I am now
thinking that it could get well past that stage, perhaps mid 200s, and there may not
even be much major resistance after that, and we could even see 300, which would really
shock wall street. I have said before there is a 25% chance Tesla could return to 300
this year, anything is possible with this stock.
Then add a bit of well timed fuel on to the fire, like Mexico breaking ground, Model 3
Highland, and Cybertruck, then it really is possible. Assuming macros hold. It may not
take too much wind back in Tesla's sails to start to see a crazy rally again.