Wow, at the time of this video, Tesla is still below $200, with a low of around 196.
Down 3.5% when the Nasdaq is up about 0.7%.
The market can just be so irrational at times.
There was no bad news about Tesla, all the fundamentals were the same today.
It sounds like the reason the stock price is getting hit is from Elon's involvement
in Twitter, and some of his latest Tweets.
TWITTER Now Elon has been clear about how Twitter
should be a platform for free speech and equally weighted on both sides.
No army of bots trying to persuade people's opinions to one side.
Some of the latest tweets "Twitter needs to become by far the most accurate source of
information about the world.
That’s our mission."
And "At the end of the day, if Twitter is indeed the most accurate source of information,
more people will use it"
Twitter is meant to be an equal platform, which was previously weighted towards the
left, and now Elon is trying to even it out, which is upsetting a lot of the left.
Just a side note, I never get political on this channel, and have never actually presented
any political positions, however, due to my extensive education in economics, I am actually
a centralist.
I believe that for the best for citizens is to have as large a middle class as possible,
with people who agree on as much as possible, and therefore they can vote on matters that
improve their society, instead of the rich voting for lower taxes and the poor voting
for more benefits.
Equality obviously plays a large part of that, but so does freedom of speech coming equally
from both sides.
Therefore I am totally behind what Elon is trying to achieve here.
ELON So Elon is trying to level out the playing
field when it comes to the media, and views on left and right.
People should be able to absorb as much unbiased information, without agendas or without propaganda
and make their own mind up from there without additional influence, especially not one-sided
bots.
That is what Twitter should be.
However, that doesn't mean that is what Elon should be.
Elon is still entitled to his own opinions when it comes to anything, including politics,
even if he is the owner of Twitter.
I think there is a disconnect between what Twitter does, and what Elon does.
Elon is allowed to have an opinion and views on how thing are.
Twitter is a platform that equally shows his views with others to the contrary.
But he still gets to present his own views, and as long as everyone else's views are also
shown equally, and people decide from reading both sides, that is Twitter's ultimate goal.
Not for people to just believe what Elon says, and act like some sort of dictator.
REPUBLICAN
And now we have Elon trying to influence the elections, but bear in mind this is Elon not
Twitter.
He is saying that he recommends voting for a Republican Congress, as the presidency is
Democratic.
He then says that "Hardcore Democrats or Republicans never vote for the other side, so independent
voters are the ones who actually decide who’s in charge!"
Now I infer this as Elon asking the independents to vote Republican.
Not necessarily because Elon wants prefers the Republican party.
This enforces a stronger pluralism within the nation, which is good as it can ensure
the correct checks are made and results in a more balanced government.
CUSTOMERS Of course a lot of Tesla customers are actually
democrats, obviously particularly in California, and I am hearing this is actually affecting
people's decision to buy a Tesla.
This is a large customer base that Elon is potentially alienating.
California is a massive car market, not only that I probably don't have to explain to you
there are probably more Tesla's per capita in California than anywhere else in the world.
As a result of these Tweets, and essentially negatively influencing a large target market
for Teslas, the stock price has dropped.
Yet the fundamentals are all the same.
The company has never looked better, with Elon claiming 40,000 vehicles a week by the
end of this quarter.
That is really getting up there, and with this exponential growth, it's not going to
take too many more 50% increases in production until the numbers are huge.
And once again I'd like to point out the operating leverage Tesla has, as these numbers increase,
the operating margin will continue to rise, which is more important than gross margin.
Although gross margin will increase significantly when these new factories are ramped too.
40K 40,000 a week!
That's over 2 million a year, which locks in 50% growth already for next year, with
no ramping or expansion.
It also places the p/e ratio of Tesla at something like 22.
That seems a bit crazy to me.
Yet this is the reality, this is the math, there is no opinion when it comes to math,
statistics - yes certainly, but not basic arithmetic.
I even bought a call option today because it was so crazy.
I couldn't resist, I am playing with my emergency mortgage fund here, which is probably more
than I need, but wanted to be extra careful.
As long as people keep listening to me and signing up to Patreon I should be ok.
I think we are just initially seeing this reaction, people don't like change especially
when it changes the opposite side that they like.
This Twitter fiasco will eventually settle down too.
People will eventually realize what Twitter is, and what Elon is doing.
They should hopefully come to really appreciate all the new features we are going to see.
It's just a difficult transition for some in the meantime.
DEMAND But this is US demand we are talking about,
that is essentially the issue here, Elon taking political stances in the US and dividing himself
from his customer base.
But you'd be surprised how fickle consumers are when it comes to money, or maybe you wouldn't.
Lets not forget two things that happen next year in the US.
Obviously the major one is the $7,500 off a Tesla from the tax credit from the inflation
reduction act.
Now Elon cares immensely about Tesla, he is not going to jeopardize the business just
when it is doing so well.
He knows there is plenty of demand in the US.
We have a lot of pent up demand for a start from people waiting for this tax credit.
This is a huge drop in price, and as I have explained before just how elastic Tesla's
are, and that it will increase demand substantially.
The other item is that Tesla have a new version coming out, the 4680 Model Y, which may or
may not be a lower price point as well.
Of course Tesla also has a new car coming out in the US, the most pre-ordered vehicle
in history, the Cybertruck, and will aslo have $7,500 credit.
Ok there may be some on the extreme left who refuse to buy a Tesla now, just because of
this.
But those consumers are going to be drowned by other consumers yelling shut up and take
my money.
Remember if you are opting to buy a Tesla competitor because you don't like Elon, you
are also putting you or your family in potentially more harm in an accident.
You are giving up all that performance driving experience, all those features.
You are having to put more effort into your driving without FSD or Autopilot.
This is an extreme amount to be sacrificing just because you don't like the CEO.
Some products are just so good, unique, or monopolistic at the end of the day, people
just need them.
But sure a lot of people need to vent how much they despise Elon or what he is doing,
and that's what happens when we see real change in the world for the better.
SUMMARY I know it's tough in investing when the market
behaves this insane in a negative way, and you are on the wrong side of the insanity.
But we have talked about it, this is investing, although this is a particularly difficult
time.
But the fundamentals are still there, the demand is still there, the profit is still
there, the growth is still there, the technology, and there is no one else coming close, and
those that try can't even make a profit.
Tesla still dominates the EV industry, which is still growing.
We are getting hit from all sides, but hopefully the Twitter stuff calms down a bit, we see
a good Q4, semi truck delivers, a buyback kicks in, 4680s ramp, and everything else,
and we look back at this time and view it as a time of total absurdity.