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@JohnN Tesla is down another 11% today. Seems like a falling knife right now. You could be right eventually, but the pain in the short-term now is real.
Elon Musk (EM) "premium" has turned into a EM "discount". His Twitter actions/antics are frustrating even his fans. I thought of posting such on Twitter, but I doubt that it will stay - so much for EM "free" speech.
ISTM @Sven ‘s original question has been largely answered. Your exposure to TSLA has now been diminished whether you did anything or not.
Began tracking TSLA a week or so ago. Some astounding daily losses over that time. ISTM there’s some valuable lessons here for investors, as the stock seemed like a “sure bet” that just kept going up for many years. A look at what can go wrong with an investment and how quickly the tables can turn. Perhaps some needed humility.
Musk seems to be going after Fauci again too, if I read the timing ( 13 hours ago) correctly. Is retweeting a 2021 article. Why is this news?
I think he is seriously mentally ill. At least other corporate executives who destroyed their companies (Welch, Kozlowski, Stonecipher) just had a zipper problem. This guy is seriously ill
Yes, I've thought the same thing for a while now. It's not all that uncommon for very high IQ to also be borderline flaky, to use the correct medical terminology.
As far as Musk personally and Tesla, I could not really care less. I do worry about SpaceX being caught up in all of this, though. They seem to be paying attention to business and doing a great job.
Even if Musk isn't ill, Krugman's question about Tesla's valuation and Wall Street's expectations of it as a business versus other tech giants is a valid one. From the article:
Even if that’s the case, though, it’s hard to explain the huge valuation the market put on Tesla before the drop, or even its current value. After all, to be that valuable Tesla would have to generate huge profits, not just for a few years but in a way that could be expected to continue for many years to come.
Now, some technology companies have indeed been long-term moneymaking machines. Apple and Microsoft still top the list of the most profitable US corporations some four decades after the rise of personal computers.
But we more or less understand the durability of the dominance of Apple and Microsoft, and it’s hard to see how Tesla could ever achieve something similar, no matter how brilliant its leadership. Apple and Microsoft benefit from strong network externalities — loosely speaking, everyone uses their products because everyone else uses their products.
In the case of Microsoft, the traditional story has been that businesses continued to buy the company’s software, even when it was panned by many people in the tech world, because it was what they were already set up to use: Products like Word and Excel may not have been great, but everyone within a given company and in others it did business with was set up to use them, had IT departments that knew how to deal with them, and so on. These days Microsoft has a better reputation than it used to, but as far as I can tell its market strength still reflects comfort and corporate habit rather than a perception of excellence.
Apple’s story is different in the details — more about individual users than institutions, more about physical products than about software alone. And Apple was widely considered cool, which I don’t think Microsoft ever was. But at an economic level it’s similar. I can attest from personal experience that once you’re in the iPhone/iPad/MacBook ecosystem, you won’t give up on its convenience unless offered something a lot better.
Similar stories can be told about a few other companies, such as Amazon, with its distribution infrastructure.
The question is: Where are the powerful network externalities in the electric vehicle business?
Electric cars may well be the future of personal transportation. In fact, they had better be, since electrification of everything, powered by renewable energy, is the only plausible way to avoid climate catastrophe. But it’s hard to see what would give Tesla a long-term lock on the electric vehicle business.
I’m not talking about how great Teslas are or aren’t right now; I’m not a car enthusiast (I should have one of those bumper stickers that say, “My other car is also junk”), so I can’t judge. But the lesson from Apple and Microsoft is that to be extremely profitable in the long run, a tech company needs to establish a market position that holds up even when the time comes, as it always does, that people aren’t all that excited about its products
So what would make that happen for Tesla? You could imagine a world in which dedicated Tesla hookups were the only widely available charging stations, or in which Teslas were the only electric cars mechanics knew how to fix. But with major auto manufacturers moving into the electric vehicle business, the possibility of such a world has already vanished. In fact, I’d argue that the Inflation Reduction Act, with its strong incentives for electrification, will actually hurt Tesla. Why? Because it will quickly make electric cars so common that Teslas no longer seem special.
In short, electric vehicle production just doesn’t look like a network externality business.
One thing I think Krugman overestimates, which is to Tesla's advantage, is the ability of the big car makers to compete. My impression is it is not so easy for Mercedes, GM, Ford, etc. to just retrofit their factories to manufacture electric cars when they've manufactured the regular fossil fuel kind for decades. Labor needs to be retrained, there are different suppliers, different equipment, etc., and the companies will have to write off losses to do it if a wholesale transition to electric occurs. So, if Tesla can manage to focus on producing a cost-effective electric vehicle the average person can afford it could still win in this category. But I don't think such a victory will be as all encompassing as Microsoft's, Apple's, Amazon's or Google's. Real competition exists, and this is not a product that you get for "free" like an email account. So, it's appeal in the short term is not universal.
Well, all of that is true right now, but I'm thinking that ten years out the big guys will own the market, as usual. But, a big unknown is if there is a possible major breakthrough in removing carbon from the environment. If that should happen, all bets are off.
While I really like electricity, I'm telling you there are really bad things that can and will happen with an all-electric energy network, and those things...
Musk has blamed Tesla’s declining share price in part on rising interest rates. But critics point to his Twitter takeover as a bigger culprit for the slide, which has wiped out about $675 billion in market cap this year as of Wednesday’s close.
In the email, Musk thanked Tesla employees for their work in 2022, encouraged them to push hard for a strong fourth-quarter finish, and asked them to “volunteer to help deliver” cars to customers before midnight on Dec. 31, if at all possible. [emphasis mine]
The billionaire asked his employees to volunteer? Crikey. Just lost the Z's, and a lot of Millenials. Never had me anyway.
Back on this planet, maybe your falling share price has a little bit to do with your share sales?
I don't care if Musk bought twitter to support AOC and The Squad. It's looking like a Spruce Goose to me, i.e. merely a symptom.
Treading water with the green energy funds I bought earlier this year that did not feature large chunks of Tesla boosting their then recent performance..
I tend to agree with LB that TSLA does have an advantage over GM F etc that have to retrofit all of their manufacturing, but both have made projections of meeting these goals in the relatively near future.
M* has the fair value of all three near double their price today, but TSLA PE is over 30, while F and GM are around 5. Same discrepancy for P/sales etc.
While it is uncertain what it will cost the legacy automakers to retool etc, I think there is a lot less risk in their stocks than TSLA at it's current valuations, even if they have crashed along with the stock. Add Musk and the risk goes up.
While electric vehicles are surely going to be take over the automobile market, it is uncertain how long it will take and the other question is who will pay for all of the infrastructure required for 50+% electric cars?
This and battery capacity will become limiting factors as more and more EVs hit the road. Not a bad idea to keep a legacy nonEV plant or two humming as people will be buying gasoline cars for years to come.
Apparently, individual investors net/net have been buying TSLA while institutional investors have been selling.
A blurb from today’s WSJ:
”Still, individual investors have been doubling down, purchasing a net $16 billion of Tesla stock this year, according to data from Vanda Research. That makes it the most popular buy among individuals this year, dethroning Apple Inc. as the most-purchased stock by individuals. On Wednesday, for example, Tesla shares were the most popular buy among individual investors on the Fidelity brokerage platform.”
Had to chime in and am probably repeating much of what has been said. Tesla is toast. Twitter is toast. All due to a very smart man letting his ego go crazy. Same/same with Zuckerberg and his metaverse idiocy.
Tesla is toast because 1. the big boys are getting involved. Here to fore, Tesla has had zero competition. Those days are over. The big boys are getting into the game and they have scale. Tesla's trying to develop scale but not anything like the big 6 or 7 auto manufacturers already have. Some have said it will be difficult to switch over. I don't think so. They switch over every year. The power plant/battery component will be more involved but it's not going to take that long. In addition, 2. Musk has alienated his entire customer base with his Twitter idiocy. He's revealed himself as a MAGA Nazi jerk and his customers are exactly the opposite. Demand is off and even used Tesla demand has cratered.
The bottom line for all of us is 'stay in your lane'.
Having mental health issues is no excuse for being a ”MAGA Nazi jerk”. But it might shed some light on this guy’s erratic and seemingly self-destructive behavior.
I agree with @rono that Musk has “screwed the pooch” with his acquisition of Twitter and subsequent behavior. Yes. Exactly. Many who desired to own a Tesla will now shun it, unless this guy can seriously clean up his act.
I don’t know if Musk is a Nazi. But another famous U.S. rocket pioneer was a former card-carrying Nazi. Yet his contributions to the 1969 U.S. manned lunar mission were monumental. Wernher von Braun … Not sure what that demonstrates except that intelligence and morality are two distinctly different matters.. Thanks @rono for the spot-on commentary.
It’s worth noting that Tesla has a market cap significantly larger still than its competitors like GM and little debt as far as I can tell. I don’t think it’s necessarily toast. The honest and fair question to ask is what is an appropriate valuation for this company? What is its likely end market share of the electric vehicle business when that business matures? How fast is its cash burn? Can it restore its brand image? It is evident that the Street has not valued this company appropriately. But that is not the same as saying it will go bust. A viable business can still be a terrible investment if you pay the wrong price for it.
Comments
$TSLA IS DOWN 70%
$LCID IS DOWN 90%
$RIVN IS DOWN 90%
$NIO IS DOWN 80%
$FSR IS DOWN 70%
$ARVL IS DOWN 95%
$RIDE IS DOWN 95%
Long tsla (very long indeed) lol
Could you believe Amazon was 6 dollars then went to 70cents before bouncing higher until now.... Anything can happen to good stocks companies
No choice but hold til 2035 retirement now
Added more TNA TQQQ tsla today
Slashed down heavily today
Both leaped call
Not sure if fake news
Buffett sold BYD last month and they say loaded Tsla last wk
Tsla
Apple
Growth stocks forward P/E extremely low
Tsla vixx Prob 40 w RSI NEG 5 lol
No big whales adding now
Could be bloody new yr
YTD -72.7%
1 Month -40.36%
Today -11.41%
(Numbers from Google)
ISTM @Sven ‘s original question has been largely answered. Your exposure to TSLA has now been diminished whether you did anything or not.
Began tracking TSLA a week or so ago. Some astounding daily losses over that time. ISTM there’s some valuable lessons here for investors, as the stock seemed like a “sure bet” that just kept going up for many years. A look at what can go wrong with an investment and how quickly the tables can turn. Perhaps some needed humility.
Cute... I like that, and I'll remember it the next time that I look at ASML.
Perhaps “remarkable” isn’t the right word.
Or community chat webull
Very interesting commentary but most are junks
Lots biased pumps w certain stocks - especially cryptos
I don’t agree with everything Krugman says here, but the differences between Tesla vs Microsoft and Apple are important ones.
I think he is seriously mentally ill. At least other corporate executives who destroyed their companies (Welch, Kozlowski, Stonecipher) just had a zipper problem. This guy is seriously ill
Yes, I've thought the same thing for a while now. It's not all that uncommon for very high IQ to also be borderline flaky, to use the correct medical terminology.
As far as Musk personally and Tesla, I could not really care less. I do worry about SpaceX being caught up in all of this, though. They seem to be paying attention to business and doing a great job.
While I really like electricity, I'm telling you there are really bad things that can and will happen with an all-electric energy network, and those things...
*** ARE NOT BEING DISCUSSED OR ADDRESSED ***
Back on this planet, maybe your falling share price has a little bit to do with your share sales?
I don't care if Musk bought twitter to support AOC and The Squad. It's looking like a Spruce Goose to me, i.e. merely a symptom.
Treading water with the green energy funds I bought earlier this year that did not feature large chunks of Tesla boosting their then recent performance..
M* has the fair value of all three near double their price today, but TSLA PE is over 30, while F and GM are around 5. Same discrepancy for P/sales etc.
While it is uncertain what it will cost the legacy automakers to retool etc, I think there is a lot less risk in their stocks than TSLA at it's current valuations, even if they have crashed along with the stock. Add Musk and the risk goes up.
While electric vehicles are surely going to be take over the automobile market, it is uncertain how long it will take and the other question is who will pay for all of the infrastructure required for 50+% electric cars?
This and battery capacity will become limiting factors as more and more EVs hit the road. Not a bad idea to keep a legacy nonEV plant or two humming as people will be buying gasoline cars for years to come.
A blurb from today’s WSJ:
”Still, individual investors have been doubling down, purchasing a net $16 billion of Tesla stock this year, according to data from Vanda Research. That makes it the most popular buy among individuals this year, dethroning Apple Inc. as the most-purchased stock by individuals. On Wednesday, for example, Tesla shares were the most popular buy among individual investors on the Fidelity brokerage platform.”
From The Wall Street Journal December 29, 2022
Article: Tesla Stock Suffers December Selloff …
Go figure.
Had to chime in and am probably repeating much of what has been said. Tesla is toast. Twitter is toast. All due to a very smart man letting his ego go crazy. Same/same with Zuckerberg and his metaverse idiocy.
Tesla is toast because 1. the big boys are getting involved. Here to fore, Tesla has had zero competition. Those days are over. The big boys are getting into the game and they have scale. Tesla's trying to develop scale but not anything like the big 6 or 7 auto manufacturers already have. Some have said it will be difficult to switch over. I don't think so. They switch over every year. The power plant/battery component will be more involved but it's not going to take that long. In addition, 2. Musk has alienated his entire customer base with his Twitter idiocy. He's revealed himself as a MAGA Nazi jerk and his customers are exactly the opposite. Demand is off and even used Tesla demand has cratered.
The bottom line for all of us is 'stay in your lane'.
and so it goes,
peace,
rono
The 50-year-old Tesla and SpaceX CEO, who first publicly disclosed that he has Asperger's syndrome in his Saturday Night Live opening monologue in May 2021
I agree with @rono that Musk has “screwed the pooch” with his acquisition of Twitter and subsequent behavior. Yes. Exactly. Many who desired to own a Tesla will now shun it, unless this guy can seriously clean up his act.
I don’t know if Musk is a Nazi. But another famous U.S. rocket pioneer was a former card-carrying Nazi. Yet his contributions to the 1969 U.S. manned lunar mission were monumental. Wernher von Braun … Not sure what that demonstrates except that intelligence and morality are two distinctly different matters.. Thanks @rono for the spot-on commentary.