TESLA: IT’S A STORY STOCK, BUT WHAT THE (YOUR)...
Transcript of TESLA: IT’S A STORY STOCK, BUT WHAT THE (YOUR)...
TESLA:IT’SASTORYSTOCK,BUTWHATTHE(YOUR)STORY?
Thepowerofthestory
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TheResilientStock
Bad news 1: Delivery shortfalls
Bad news 2: Fatality of driver using Tesla Auto PilotBad news 3: Tesla buys Solar City
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Value:Story+Numbers
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AStoryStock
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TheStoryStockEffect
¨ Storychangesandinformation:itisshiftsinthestorythatcausepriceandvaluechanges.Anearningsreportthatbeatsexpectations(ineitherdirection)oranewsstoryofsignificance(goodorbad)maynothaveanyeffectoneither(valueorprice)ifitdoesnotchangethestory.
¨ Widerdisagreements:Whenacompany’svalueisdrivenprimarilybynumbers,thereislessroomfordisagreement.Incontrast,withastorystock,investorstoriescanspanamuchwiderspectrum,leadingtoamuchbiggerrangeinvalues,asillustratedwithUberinthispost.
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TheTeslaStory:TheChoices
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Tesla:Whatif?
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ElonMusk:TheXFactor
¨ ItisalmostimpossibletoseparateTesla,thecompany,fromElonMusk,itsfounder.Whatyoubelieveaboutonewilldrivewhatyoubelieveabouttheother.
¨ IfyoubelievethatMuskisavisionary,capableofseeingtheworldasitwillberatherthanasitis,andamanwhohasthebrillianceanddrivetodeliveronthatvision,youwillfindTeslatobeabuy.
¨ Ifyoubelieveinsteadthatheisashowmanwhopromisesfarmorethanhecandeliver,Teslaisasell.
¨ Thereisanintermediateposition,whereyoubelive thatMuskisaflawedvisionary,withtheflawsbeinglackoffocus,athinskinandadisinterestinthenittygrittyofoperations.Teslacanbeabuy,butonlyattherightprice,andifMuskcanfindanoperatingpartner.
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Tesla:InvestmentPlays
1. TheMomentumPlay:Youcansurfthestock,buyingitasthestorygetsbiggerandstrongerandgettingoutasthestorydevelopsweakness.
2. TheShortBet:IfyoubelievethatMusk’sflawswilloverwhelmhisstrengths,youcansellshortandwaitforthemarkettocomearoundtoyourpointofview.
3. TheLongBet:IfyoubelievethatMusk’sstrengthsaremuchgreaterthanhisweaknesses,youcanbuyandhold,ontheassumptionthathewilldeliveronhispromise.