The Bull Case for Tesla

So you might be thinking, “this article has nothing to do with me.” Give me a moment to explain. This article has everything to do with you because this company, Tesla is on the verge of changing the world in a BIG way. If you thought the iPhone had an impact, what Tesla has in the works could up that. Perhaps not everyone will own a Tesla vehicle or power supply, but they will he impacted by the changes this company is bringing to the world. Tesla will be like the Apple of transportation, energy production and storage in 3-7 years. Other companies will either need to copy or risk extinction. It’ll be hard to go through your day without talking or hearing about Tesla robo-taxis, storage batteries and yes, their vehicles.

When the going gets tough

Tesla mission statement: To accelerate the world’s transition to sustainable transport.

So let’s talk about Tesla. Okay, it’s a car company that was started by Martin Eberhand and Marc Tarpenning, two guys most have never heard of. But Tesla didn’t become the company it is today without Elon Musk taking the reigns. This founder of PayPal and SpaceX is not your average CEO. He helped found an online payment platform that has transformed how we make payments, and a rocket company that plans to send people to Mars within the next 10 years. But you might say, “his car company, isn’t doing so well”, and that you might be correct. Sales are down (but so are all auto manufacturers), and he’s stated the company will run out of money by the end of the year at the current cash burn rate, if they don’t start cutting costs. That’s why I believe the survival and rise of Tesla will be a Black Swan Event. It seems improbable and incomprehensible that this “car company” will survive the current slide and imminent implosion. But, like Amazon before it, when critics claim a technology company with a revolutionary ideas is about to go bust it does the complete opposite. It pulls through, and explodes, rising above the competition, indefinitely.

Comparing apples to apples

Let’s have a look at Amazon. In early 2000s, in the wake of the Dot Com crash, Amazon and the management had lost investor confidence, people were being let go by the thousands and the internet looked like a failure. Yes, people thought the internet was going bust! And then all of a sudden, they were hiring again, business was booming and they began their path to transform retail, online shopping and cloud storage. In writing this article, Amazon’s market cap is $850 billion, greater than that of any company. Many of us all wish we had invested in Amazon when it’s share price was $10, $100 or even $500, but we didn’t. Or perhaps you did, but sold as you panicked with the many ups and downs the company experienced. Today, it’s share price site above $1700, with highs earlier this year at $2000. So how did this happen? How did a company, about to go bust, pull through? It’s called the Black Swan Theory.

What have you Black Swan?

Nassim Taleb developed the Black Swan Theory, and unpacks it in his book, the The Black Swan. A black swan event is a surprise, no one sees it coming. It has a major and significant impact and people look back and convince themselves the occurrence was expected. We’re talking about events like World War I, 9/11 and explosion of the internet. Tesla’s suruvical and explosion will be just that. It’s been tittering on the brink of collapse and boom for some time. But I revoke it will be the former, and like Apple and Amazon before it, few will see it coming.

The Tesla treasure chest

Let’s look at Tesla’s revolutionary ideas, a company with a much more solid business plan than Amazon ever had. They have developed the smart vehicle, a new way of commuting, energy collection, distribution and storage. Companies by the likes of Daimler-Benz and GM pay to use their technologies, so there’s a steady stream of income without even selling another vehicle, battery or storage unit. But what could be most exciting and valuable asset is the automated manufacturing they have developed and patented, found under the roof of their Gigafactories! This is not your average company, and it’s not going away.

Investors, hold the towel

Investors aren’t about to give up on Tesla. This is a company that has been fast moving ahead for many, many years, not just creating beautiful and innovative electric vehicles, but everything around that including a vast supercharger network, efficient means of production (Gigafactory), self driving technology and the concept of robo-taxis. Oh, and it’s building factories in China with the Chinese government’s full support. A claim few American companies can make.

Let’s talk about Tesla and the completion. After all, it’s these companies that are supposedly stealing it’s thunder. Tesla beats the competition in three BIG ways:

1. Invests more in R&D than marketing
2. Capitalizes on new technology opportunities
3. Seeks to change the way we commute

Sure, Tesla’s share price has dropped nearly 50% this year, but did anyone ever consider that a lower stock price, with less trading action, will be a boon for the company’s future? Less pressure, and more opportunity for new investors. Once it’s share price drops to $150 I can guarantee investors that got spooked are going to jump back in, and new ones will jump on the bandwagon. Tesla isn’t going away. Not today, not tomorrow, it’s here to stay. Boom, boom!