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I have a significant fraction of my net worth invested in TSLA and have done so since the IPO. I believe TSLA will become a $50 billion dollar company over the
by confluence 14y ago
I have a significant fraction of my net worth invested in TSLA and have done so since the IPO. I believe TSLA will become a $50 billion dollar company over the forthcoming decade as it rides 2 cost trends and global GDP growth. Elon Musk does too - his renumeration package has TSLA pegged at a possible ~ $43 billion (http://seekingalpha.com/article/786711-a-43-billion-tesla-musk-s-incentives-of-interest http://seekingalpha.com/article/786711-a-43-billion-tesla-mu...).
I add to my position every month when vol. gets high - so please don't buy it :)
Fundamentally what people must understand is that electric cars have reached ICE parity in cost, use and ease of maintenance. Furthermore they either have, or will surpass, ICE vehicles in all categories over the coming decades on a total cost of ownership calculation. Finally by the end of the decade the lump sum cost of a comparable middle class electric vehicle at the dealer (or website) will be lower than an equivalent ICE vehicle on the day that you buy it.
There are 2 fundamental price forces driving this phenomena - and that is peak oil, in addition to Li-on battery production related to the explosive growth of smartphones/laptops/tablets over the last decade. Indeed this is what I look for in any investment strategy - where is the falling waterfall in cost, who is going to get fucked, and who is going to ride the barrel down. Falling prices drive the future - look for converging falling cost trends and a convergence of secondary technologies (http://www.youtube.com/watch?feature=player_detailpage&v=1FyhLQOsNac#t=1410s http://www.youtube.com/watch?feature=player_detailpage&v... || http://www.amazon.com/Running-Money-Honchos-Monster-Markets/dp/B000GG4ZJK http://www.amazon.com/Running-Money-Honchos-Monster-Markets/... || http://gigaom.com/2006/10/26/jawed-karim-how-youtube-took-off/ http://gigaom.com/2006/10/26/jawed-karim-how-youtube-took-of...).
> In the talk, which is about 45 minutes long, Karim also points to the confluence of broadband penetration, Flash 7, digital cameras and phones, and cheap bandwidth as environmental factors for YouTube’s birth on February 14, 2005. Then he plays the company’s very first video. Uploaded April 23, 2005, it shows Karim himself standing in front of elephants at the zoo. “The cool thing about these guys it they have really, really, really long trunks,” he says. That’s about it.
Gas prices will increase over the next 2 decades whilst battery costs will fall, squeezing ICE vehicles out the affordability range of most Americans.
Back in 1900 electric vehicles died because battery tech was not cost competitive with ICE vehicles, and rightly so, they sucked. In 2012, ICE vehicles began to die, because they were no longer competitive with electric vehicles.
Welcome to the future.
- djt 14y agoICE = Internal Combustion Engine
- marvin 14y agoI've followed your comments for a while, I think you have some interesting insights. But you are aware that betting big on Tesla like this is a very big risk, right? It's got a potentially very big payoff (and probably an expected value above 1), but there is still uncertainty. Tesla stock is valued a lot higher than the company's assets, so there is still big potential for a major loss, for instance if the established car companies are able to get their act together in time or if some other, unexpected event happens. I myself have about 15% of my (relatively small) net worth in Tesla, so I am making the same bet you are, but I am curious if you've given the other scenario any thought.
- confluence 14y agoI have covered and perfectly hedged costless collars (via options - +/- 10-20% depending on IV) on all my equity positions to protect myself against catastrophic risks (aka black swans) at little to no cost to myself. Here are some examples of risks I have considered (many more but cbf): economic failure (GFC)/terrorist attacks on TSLA (9/11)/unexpected death of main principals (Elon Musk et al.)/catastrophic accounting fraud (Enron/MCI Worldcom)/financial failure (Solyndra)/bankruptcy (A123)/production fraud (Fisker/BYD). I've run many possible outcomes both in my mind and in computer simulations of TSLA's future finances (programming rocks). I've completed DCF, Monte Carlo and worst-case scenarios (by far the most important) on TSLA's future finances - which although shaky under certain conditions - do not particularly worry me, since I'm hedged, moderately risk taking and a value investor who doesn't really give a shit what the market thinks. I've got a range of prices based on market outcomes and future EV demand telling me whether to buy or sell. I don't use leverage, margin, or derivatives that aren't fully covered and hedged by my own cold hard cash no matter what the environmental situation - let's me sleep like a baby. I hate uncapped risk - hate, hate, hate it! I'm impervious to volatility, time decay and catastrophic risk. My worst case VAR is 20% on the TSLA position - aka loss of 20%. I have no problems with that - I'm actually used to mark-to-market drawdowns of 50-60% - so 20% is peanuts (my current CAGR for the last 4 years has been 35% - mostly because I'm the guy that buys in a crisis with a margin of safety significantly below fair value). My nightmare scenario is actually TSLA gapping up 20%+ without me being there to lock in another costless spread. I'm not impervious to nuclear war - but you can't hedge that shit. I know risk, tech, finance and economics inside and out. Concentration is for people like me who know what they are doing. For everyone else - there's Mastercard.. I mean index funds :D