By on February 4, 2020

Despite it only being a little over a month into 2020, Tesla’s stock has already doubled since New Year’s. Share prices surged to over $900 before Tuesday’s trading, leaving many scratching their heads as to how one of the smallest global manufacturers manages to clean up so well on Wall Street.

Seeking answers, Bloomberg looked to industry analysts and executives from rival car manufacturers to better understand Tesla’s mojo — and determine whether all the stock heat is warranted. The gist appears to be that Elon Musk and company are simply running away with battery technology, something that’s difficult to refute. However, some claims that Tesla has surpassed what constitutes an automaker feel overblown and not entirely consistent with reality. 

“There’s a recognition that Tesla is in a preeminent position in terms of EV technology,” Peter Rawlinson, the chief executive officer of Lucid Motors and former Tesla employee, told the outlet at Monday’s BloombergNEF Summit in San Francisco. “They’re even further ahead than has been reported, and I think the gap is widening, not closing.”

While customers often have to pay more, the maximum range of Tesla vehicles consistently trumps whatever mainstream manufacturers can produce. Porsche’s Taycan was clearly designed as performance alternative to the Model S and is quite expensive at $103,800 (to start). Yet its maximum range barely exceeds 200 miles. Tesla’s sedan starts about $30,000 lower and will poop out closer to 370 miles.

That’s a cherry-picked example to highlight disparities. There are certainly smaller EVs with more reasonable MSRPs that can break the 250-mile barrier. But Tesla remains king in the premium market. Other brands can’t seem to touch its battery range, and it’s the only car business with a comprehensive network of EV charging stations.

“I’m not being critical of the Germans — it’s wonderful they’re creating these cars and coming in,” explained Adam Jonas, analyst at Morgan Stanley. “But it just shows much of this technological gulf remains.”

“We think they are pretty far ahead in battery and EV technology,” Jonas also said. “Tesla has moved from being seen as an auto stock to be seeing as a tech stock mentioned in the same breath as Amazon, Apple and Google.”

Tesla is absolutely an automaker; endlessly favoring anything that can be considered a tech company seems like a rather short-sighted way of trading. However, it is true that the business isn’t viewed the same way legacy automakers are. Plenty of people see Tesla as more than a car brand. They’re wrong, of course, but that matters little on the trading floor.

Waves of criticism don’t appear to have changed many opinions, either. We’ve often complained about CEO Elon Musk making unkept promises, and the whole world seems to be gradually turning on Autopilot, but it doesn’t appear to be hurting the company. In fact, Tesla’s ability to market itself has undoubtedly helped it get to where it is today. Major delays that would have embarrassed an established automaker were little more than hiccups for the American EV brand. We’re always one press conference or mysterious tweet away from Tesla being back in the headlines, usually underpinning some important change or new product. Combine that with an early lead in developing electric vehicles and you’ve won yourself a prize.

“The thesis for Tesla’s business miracle is rooted in the handful of years that the company operated with effectively no competition,” Gene Munster, managing partner of the venture capital firm Loup Ventures and long-time Apple analyst, wrote Monday in a research note. “Tesla has nearly a decade head start in EVs as other automakers under-invested in the space.”

Munster said Tesla’s valuation is as valid as investors choose it to be, predicting its market cap surpassing $140 billion over the next five years if traders continue prioritizing tech companies. He also said the latest surge was probably the result of short sellers — the bane of Elon Musk’s existence.

[Image: JL IMAGES/Shutterstock]

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40 Comments on “Tesla’s Stock Remains Insane...”


  • avatar
    Hummer

    “ Tesla’s sedan starts about $30,000 lower and will poop out closer to 370 miles.”

    Is this so?

    • 0 avatar
      vvk

      > “ Tesla’s sedan starts about $30,000 lower and will poop out closer to 370 miles.”

      > Is this so?

      Not quite. Model S currently starts at $80k. The Taycan buyers may also claim a $7500 federal tax rebate, which brings the price difference to $103800-7500-80000=$16300. However, Model S is loaded with almost no additional options, while a Taycan buyer can easily spend double on things like $500 fake engine sounds or $450 “Porsche” logo on the center armrest.

    • 0 avatar
      mcs

      Is this so?: Actually, even though it’s not on the web site, The Model S is capable of 380 EPA now according to Tesla. They’re saying 400 is in sight. It’s not just software. They’ve been tweaking the battery chemistry as well.

  • avatar
    jmo

    The B&B sounds a lot like RIM/Blackberry or Nokia fanboys back when the iPhone came out. Sure, Apple might have a little something but RIM and Nokia have tons of experience and 10s of billions of dollars to throw at the problem. Just wait till they kick Apple’s ass.

    Then RIM released the rushed to market Curve(IIRC) and it was a giant turd. Is the Taycan the turd that reveals how unlikely competitors are to beat Tesla?

    • 0 avatar
      JimZ

      the difference is everyone wanted smartphones. There’s no evidence of great demand for BEVs. The Elon Musk Fan Club is a sliver of a fraction of the population, so predictions that Tesla is just going to take over the industry have a very “Disco Stu” vibe to them.

      • 0 avatar
        jmo

        “the difference is everyone wanted smartphones.”

        No one wanted them before Apple showed how it should be done.

        And question for you Jim – When the iPhone came out were you one of the wants saying, “That’s the future! RIM should just give up now?” Or were you skeptical?

      • 0 avatar
        WheelMcCoy

        @JimZ – “the difference is everyone wanted smartphones. ”

        That’s easy to conclude in hindsight. To this day though, I know people who would still prefer a dumb flip phone.

        Nevertheless, there are clues that demand for BEVs will grow. China has such a bad air pollution problem, they are mandating them. Just as compelling, VW’s CEO Herbert Diess came out in full support of BEVs and Tesla. And Ford is working on the Mach E, and an EV pickup truck with Rivian.

        It’s just that Tesla has a big head start, and unlike its competitors, knows an EV is a lot more than replacing an engine with a motor, and a gas tank with a battery. (Looking at GM’s upcoming Hummer EV)

    • 0 avatar
      SCE to AUX

      “Is the Taycan the turd that reveals how unlikely competitors are to beat Tesla?”

      It is one of several, a club which includes the Audi e-tron, Jaguar i-Pace, and M-B EQC – to name a few.

      Possible contenders are the Ford Mach-E (doubt it), whatever GM produces (doubt it), and Rivian.

      Even if the competition produces a better car or truck, they do not have Gigafactories or the Supercharger network, which means their production costs are higher, and their long-range utility is limited.

      • 0 avatar
        JimZ

        so basically, your argument is that the industry is going to move whole-hog to EVs, but nobody other than Tesla will be able to make a worthwhile EV? Is that what I’m hearing?

    • 0 avatar
      dal20402

      Worth noting for this analogy that inventing the modern form of the smartphone was only Apple’s first achievement. It followed through by executing one of the most successful scaling-up operations in the history of business. That is where Tim Cook cut his teeth and why he is now the CEO.

      Everyone knew the second Steve Jobs walked onstage that the iPhone was the future, but it was a pretty likely outcome that the iPhone was the future the same way the Mac was the future in 1984: as something for the big guys to copy, and Apple to keep selling in niche numbers.

      Tesla will have to pull a similar execution rabbit out of its hat to become one of the world’s big automakers. I don’t see Elon as the guy to pull off that task, and I think it’s more likely that Tesla ends up licensing technology to the big guys.

      • 0 avatar
        JimZ

        “Worth noting for this analogy that inventing the modern form of the smartphone was only Apple’s first achievement. It followed through by executing one of the most successful scaling-up operations in the history of business. That is where Tim Cook cut his teeth and why he is now the CEO.”

        TBH Apple didn’t “invent” that form. They were the first who made the software running on it good. the LG Prada was announced first, but the OS/platform was trash.

        • 0 avatar

          I worked on Prada phone software (DRM/crypto engine). It was not as good as iPhone in any aspect. I also worked on early Android phones like Motorola Droid and the rest of them including rarities like Toshiba and Sharp with stereo screen – they sucked big way compared with iPhone.

    • 0 avatar

      jmo, cannot agree more. People are retrogrades, even selfproclaimed progressives, They can hardly see even 1 year ahead except of some visionaries like Steve Jobs or Elon Musk.

  • avatar
    RedRocket

    It’s like weed stocks in Canada, sooner or later there will be a reckoning.

  • avatar
    dal20402

    With Elon in charge it can become difficult to distinguish between what is real and what is hype.

    Real: Tesla has an efficiency advantage over everyone but maybe GM.
    Real: Tesla is a superb manager of image and has achieved real prestige.
    Real: Tesla is trying hard to take some of the deadwood out of car sales.

    Hype: Tesla is nowhere close to “Full Self-Driving,” and “Autopilot” is a borderline fraudulent name.
    Hype: Tesla interior design is not revolutionary, it’s just cheap and minimalist.
    Hype: Tesla is not going to solve traffic (which is a simple geometric problem: cars take up a lot of space).
    Hype: Tesla cannot easily scale to Toyota/VW/GM size in the near future.

    I think Tesla is sitting on a gold mine of IP that will be licensed across the entire car industry and generate a nice income stream as long as the patents remain active. I don’t think that remotely justifies its current valuation, which seems absolutely bubblicious.

    • 0 avatar
      bunkie

      You left out Live updates.

      Aside from electrification itself, I can’t think of a feature that resonates so much with tech-savvy consumers. Despite having had years to replicate this capability, the best that can be managed is “take your car to the dealer ro get this new feature”.

      • 0 avatar
        dal20402

        My Bolt will update itself over the air and has done so a couple of times since I bought it. Now, granted, I didn’t get major new features that way, but I did get an improvement to the “hilltop” charging mode and a couple of meaningful bug fixes.

        • 0 avatar
          bunkie

          I must admit that I wasn’t aware of its over the air update capability. The poster child for my argument is the Jaguar I-Pace which must be brought to the dealer.

    • 0 avatar
      vvk

      > Hype: Tesla is nowhere close to “Full Self-Driving,” and “Autopilot” is a borderline fraudulent name.

      This is not true at all. AP is life altering. You may think that it is nothing but a fancy version of adaptive cruise and lane keep assist that every other automaker offers but it is not. I am on AP 90% of the time on every kind of road. It is so much easier to drive a Tesla vs driving any other car! Once FSD is implemented, it will revolutionize the way people approach driving. I drive 150 miles a day on extremely challenging roads (think Rallye Deutschland) under a lot of time pressure. While it is extremely fun to do in my RWD M Sport BMW 550i with Active Handling and manual transmission, the amount of effort that it takes is so much higher than driving the same route in my Model S.

    • 0 avatar
      CapVandal

      If Tesla could become a dominant software company, it would be much more valuable than any auto manufacturer. Software has low capital requirements and great margins. Plus, the marginal costs of producing that next copy is approximately zero.
      Auto manufacturing, in contrast is one of least profitable businesses. It’s capital intensitive, has low margins, unionized workers with expensive pensions (at least legacy manufacturers), low ROIC, and on and on. Plus global overcapacity.
      I’m not saying they will do it. Rather, that becoming the mere vendor of AD software and other IP is the best thing that could happen to them. Getting out of the rather hopeless business of manufacturing low profit hardware.
      Naturally, everyone knows software is a great business, so it is brutally hard to get a foothold, but Tesla is starting as a market leader. They would still have Google nipping at their heels.

  • avatar
    bunkie

    Looking at virtually every other electric car, it is clear that no other manufacturer really understands why Tesla has such affirmation.

    There is a huge difference between a company that is all-in on its vision versus one that is simply reacting, hoping to carve out some pieces of the market by kind of trying.

    Here’s another way to look at it:

    The crowd that has wanted flying cars (to use one example) has picked up on Tesla because no other manufacturer shows any sign of being able to produce revolutionary products. They may not get a flying car any time soon, but if anyone can make one, who would you bet on?

  • avatar
    SCE to AUX

    “In fact, Tesla’s ability to market itself has undoubtedly helped it get to where it is today.”

    Unlike Subaru, they run no ads. Musk hype is a factor, but the product sells itself.

    And now, with Tesla outselling many other well-known brands, their visibility adds credibility to the brand. They didn’t build a factory in China just for fun, either.

    Still, $900 for TSLA is way beyond crazy, even if they are now profitable.

    • 0 avatar
      Guy A

      Tesla do use paid commentators on the web. Remember a lot of those to be produced Roadsters are to go as rewards to referrers. That costs money.

      Also Tesla is not yet profitable on a GAAP basis. As tax credits wind down (US, California, Norway, Netherlands) sales contract – not good for a growth company.

    • 0 avatar
      JimZ

      “Unlike Subaru, they run no ads. Musk hype is a factor, but the product sells itself.”

      it “sells itself” to a particular personality type. Geeks. The kind of people who think the ability to ssh into their car’s infotainment system is a useful feature. It’s no coincidence that Tesla fans are also SpaceX fans and consider themselves experts on both industries as well as whatever else Elon says he wants to get into.

      • 0 avatar
        SCE to AUX

        Nice diversion. This Tesla fan bought a Hyundai.

        I can’t speak for the expertise of Tesla fans or SpaceX fans, but both companies are indeed experts in their industries. Their competitors are featuring in amateur hour at the moment.

        • 0 avatar
          JMII

          My wife worked for someone who bought a Telsa. He wanted a nice luxury sedan. Not needing gas was a bonus. Having a fancy cruise control system was a bonus. Having a super quiet, minimalist interior was a bonus. Turns out Telsa makes a good car, it just happens to be an EV.

          • 0 avatar
            JimZ

            “He wanted a nice luxury sedan.”

            then why did he buy a Tesla? they’re hardly what I’d call “luxury.”

          • 0 avatar
            Guy A

            People say Tesla is luxury and I agree some of the materials are good. But the Taycan is superior and a higher quality brand, better built and more personalisation options.

  • avatar
    jack4x

    This is a bubble, but some unique factors make it hard to predict.

    Tesla is by far the most shorted stock on the NYSE. Once positive news comes out and the stock starts rising, an inordinate number of shorts need to buy to cover their losing position, and the rise accelerates, which causes more shorts to bail, and so on.

    That more than anything I believe is why the stock has gone up 50% in the last week. There’s certainly no justification for a valuation even half as high using any traditional methods

  • avatar
    Dan

    This degree of volatility on the way up will be just as explosive on the way back down. This bubble market is just waiting for a pin and TSLA’s cap – 170BB right now – is getting to the point that it just might be that.

  • avatar
    AnalogMan

    In a bubble stock market like we’re in now, all movements are exaggerated. This is especially true near the end of the bubble, and with run-ups in price as short-term day-traders try to squeeze a few more dimes of profit out before the inevitable popping, and the shorts cover their positions. So many people either have very short memories, or refuse to learn from history. This story has happened many, many times before, and will happen many times again.

    Sure, some people have made a lot of money in the short term. Those that bought Tesla stock at $400 have made a nice profit. But over the long term, it’s funny how fundamentals still are the most important. Sustainable profits, real revenue growth, fundamental long term demand, and many metrics such as EPS and P/E ratios. By any of those measures which have been repeatedly shown to be the most accurate and predictive of long-term performance, Tesla is insanely over-valued.

    Tesla fan boys like to crow about how Tesla is ‘different’. If I had a nickel for every time I heard about a company that was ‘different’ I’d be very wealthy. It’s only ‘different’ in the short term. Dan and jack4x, I think you are absolutely right. In the late phases of a bull market, it only takes a catalyst to start the inevitable ‘correction’. It’s hard to predict when this will happen and how much longer it will go on, but in the long term, the shorts will be right.

  • avatar
    ToolGuy

    GM and/or Ford will crush this upstart like a bug…

    …just as soon as they get their plans together.

  • avatar
    randyinrocklin

    I have not checked on pricing on put options for tesla stock. But I would be loading up a couple of in the money puts.

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