Tesla's Stock Remains Insane

Matt Posky
by Matt Posky
teslas stock remains insane

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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4 of 40 comments
  • ToolGuy ToolGuy on Feb 04, 2020

    GM and/or Ford will crush this upstart like a bug... ...just as soon as they get their plans together.

    • See 1 previous
    • JimZ JimZ on Feb 05, 2020

      @Inside Looking Out just as likely personal car ownership will become rare as Uber becomes profitable because everyone's using them.

  • Randyinrocklin Randyinrocklin on Feb 04, 2020

    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.

  • Tassos While Acura was the first Japanese attempt to sell 'luxury' (or "premium") vehicles in the US market, and despite its original good success in the near-luxury segment with the Legend and the far smaller and less expensive Itegra (a glorified Civic), it later lost its momentum and offered a series of underwhelming vehicles. It sure is not a LUXURY maker, and as long as it offers FWD or AWD and NOT RWD vehicles, it will never be taken seriously as a serious sports cars maker. Infiniti is much worse, and if both of them go under, few will notice. Lexus was more successful, offering pimped up TOyotas for 10,000s more, but there is NO vehicle in their lineup, esp now that they scewed up the only serious entry (the LS), that I would care to consider. AND I say all this as a very satisfied owner of 5-speed Honda coupes and hatchbacks (a 1991 Civic hatch and a 1990 Accord Coupe).
  • Mike Beranek Yet another reason to accelerate the transition to electric vehicles charged with energy from wind & solar with modern, non-Monty Burns nuclear as a backup.
  • Tassos The cap the timid Western Europeans agreed to, a HIGH $60, which still lets Putin make a TON of billions of $, was way too HIGH. Ukraine correctly complained about this, it had asked for a $20 cap, I believe.
  • FreedMike "...I wouldn’t recommend holding your breath until fuel prices drop."Regular is $2.87 at my local gas station today. Considering that it was over four bucks this summer, I'd call that a drop. And it happened with the war still going on, the GOP not taking over Congress, Dark Brandon in the White House, and the Theoretical Keystone Pipeline still being canned. Imagine that. And I wonder if poor Slavuta has broken out the "will rap for food" sign yet.
  • THX1136 I would imagine the caps will have minimal impact. Putin is going to do what he wants to do regardless of how the citizens of his country fare.