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Tesla (NASDAQ: TSLA) inventory was trying down and out earlier this yr. Automotive gross sales have been slowing. And June’s highly-anticipated robotaxi launch in Austin, Texas, was about as thrilling as chilly soup.
However CEO Elon Musk piled in with a $1bn funding within the firm on 12 September. The inventory had already been recovering. And on the time of writing, it’s greater than doubled since its 52-week low.
Why does this make me nervous?
In a single mild, Musk’s new buy suggests he may very well be making good on his speak of refocusing on the corporate. Many traders misplaced religion when he grew to become distracted by politics. And quite a lot of don’t like seeing the boss pulled between a number of competing pursuits.
Investing guru?
From one other route, is Elon Musk an ace investor with a observe report of solely shopping for when he sees a transparent worth alternative?
I solely have to assume again to the eye-watering quantity he paid to purchase Twitter, since renamed X and now a shadow of what it was. Elon Musk has some admirable qualities. However he’s no Warren Buffett.
Actuality
What’s this a few actuality distortion area? It’s a time period Bud Tribble at Apple famously used to explain the best way Steve Jobs was in a position to persuade himself and others that apparently unimaginable issues may very well be achieved.
As of late, Elon Musk more and more appears to be utilizing an analogous form of instrument. Disappointingly, I’m not the primary to see the similarity. It appears Richard Waters on the Monetary Occasions made the connection again in 2016. I doff my cap.
Crucially, Steve Jobs was singularly targeted on Apple. And most of the time, he pulled it off. Can Musk do the identical? Can he get Tesla again on observe the best way Jobs did at Apple? That continues to be to be seen.
What to do?
A part of me sees Tesla and Musk as genuinely visionary, with an array of modern, high-tech developments having the potential to revolutionise the automation of so many features of future life. And it’s a mistake to worth Tesla simply as a automotive maker, proper?
The opposite me is the one who simply learn the headline “Tesla: Time To Wake Up From The Dream, Strong Sell.” It’s from Agar Capital at Searching for Alpha, who factors out that, proper now, Tesla’s enterprise truly is just making electrical automobiles — with the remaining described as “narrative.”
It’s probably lucractive narrative. However is it narrative value a ahead price-to-earnings (P/E) ratio of 300? I’ve my doubts.
I believe traders would possibly do nicely to contemplate holding off for some time, watch the place the enterprise goes within the subsequent yr or so, and see what occurs to that valuation.
