So I'll admit up front I don't know a lot about investing, but I at least understand a decent amount about business fundamentals. What I can't understand is why Tesla's stock hasn't tanked yet. They're losing business across every sector they sell in, they're trying to hard pivot to robotics technology and they have the most vocal egocentric CEO constantly trying to extract personal value from the company. If I owned TSLA stock one of these alone would spook me, but TSLA is still trading at all-time highs. None of it makes logical sense to me, genuinely is there something I'm missing here? Has TSLA just become a meme like Gamestop to the point where the business itself doesn't matter at all?
Tesla was once the most shorted company of all time. GameStop forced the system to adapt in ways that makes shorting harder to track. It's unclear how much of the old short positions (when Tesla was valued around $20bn) are still open.
These facts imply some probable second order effects:
- Big money trapped in short positions after Tesla was added to S&P 500 desperately needed people to sell Tesla shares so they could cover.
- The costs of sponsored content to turn public sentiment against Tesla and Elon are insignificant compared to the liability of those short positions.
- covering those short positions (even gradually over a long time) pushes up the share price above what it would otherwise be.
I suspect this is why it's so confusing. Simultaneously Tesla prospects appear worse than they are if your impressions are formed by articles written by media institutions that shorts are paying for you to read, and the share price is above what even a balanced perspective would consider reasonable because shorts are still covering.
Also "meme stock" really just means stocks that had extreme short positions taken against them are discovered by many small money investors that coordinate over social media.
In some cases the short positions are so large they really should be illegal but hedge funds used loopholes. The lack of loopholes in Canada has lead to lawsuits.
So stocks over-shorted by hedge funds and discovered by retail investors = meme stock (at least in many cases.
Tesla never traded on value. It has always been a kind of meme stock. The CEO will promise the sky, give 10% of what he promised. The shareholders will praise that as something incredible, then change the focus to another area. Now they're again changing the focus to Ai and robotics, even though Musk himself has a competitor company in this area. It's a never ending game that in a decent country should have stoped long ago.
Tesla isn't tanking for the same reason Amazon didn't tank when they built AWS. They used a low margin business to nurture one of the greatest businesses in history. Tesla aims to do the same thing with robotaxi, energy, and eventually humanoid robots. You might not think they will succeed but enough people do that the stock price reflects about a 10-20% chance of success.
Just the robotaxi business alone could be worth hundreds of billions a year in avoided insurance costs and save the average Western family about $5k in transportation costs annually. If it works. Most people don't think it will, but most people thought Amazon wouldn't work either.
> Just the robotaxi business alone could be worth hundreds of billions a year in avoided insurance costs and save the average Western family about $5k in transportation costs annually. If it works. Most people don't think it will, but most people thought Amazon wouldn't work either.
For me, it's not that FSD will never work, it's that they're obviously at least 6 years behind Waymo.
For humanoid robots, again, it's not that it will never work, it's that not only is there plenty of competition that's already beating Tesla to the market for the "mostly remote controlled with a bit of automation" model (which is useful, I don't want to undersell that), but also that there will be at least a 5-10 year gap between the AI hardware necessary for a level-5 self driving car fitting in the power envelope of a car, and the hardware fitting in the power envelope of a humanoid robot that can get into a car and drive it (and that a fully autonomous humanoid robot is harder than level-5 self driving).
Energy? Again with the competition: they're one of the worst current brands in the world market — it's not the idea's wrong, it's just that they're the Blockbuster to a dozen would-be Netflixes.
Even with cars, competition from cheaper better models from China and Europe would already be biting Tesla's global sales even if Musk was not angering a significant fraction of what used to be Tesla's core market (upper-middle-class environmentalists).
While Amazon was running in the red, they could've turned profitable before they did. They could just turn the knob on pricing and become profitable. Bezos is very much a numbers guy.
Elon flies by the seat of his pants. There's no knob at Tesla. There's no robotaxi product or service yet. Viability is way more than a question of pricing.
There's an alternative explanation to TSLA being a meme stock: investing in Tesla is investing in the financial wellbeing of one of the most influential people on the planet. The way the world is going, it's not unreasonable for TSLA shareholders to believe they may get extrinsic rewards from propping up Musk beyond financial gains.
That compensation package comes with very steep performance requirements.
There are twelve separate performance milestones, including Tesla's market capitalization growing to $8.5 trillion and delivering 20 million vehicles. He must also meet product-specific goals, such as 10 million active "Full Self-Driving" (FSD) subscriptions, 1 million "Optimus" robots delivered, and 1 million robotaxis in operation. These goals are separated into "tranches" that must be achieved over the next decade.
On the one hand, maybe it’s just how crazy our economy feels lately but I don’t conceptually have a problem with, if you sell a 100 million cars for 50k each, and keep 10k for yourself, you should get a trillion dollars. Innovation and providing a product people want should be rewarded. On the other hand, I do have a problem with:
* market manipulation to get that valuation.
* using that money to manipulate the government/rules to preference yourself
IMO this entire pay package is not a bet on Tesla doing well, it's a bet that intentional inflationary monetary policy will erode the value of the dollar and Tesla will remain solvent during the process.
Readit News
These facts imply some probable second order effects:
- Big money trapped in short positions after Tesla was added to S&P 500 desperately needed people to sell Tesla shares so they could cover.
- The costs of sponsored content to turn public sentiment against Tesla and Elon are insignificant compared to the liability of those short positions.
- covering those short positions (even gradually over a long time) pushes up the share price above what it would otherwise be.
I suspect this is why it's so confusing. Simultaneously Tesla prospects appear worse than they are if your impressions are formed by articles written by media institutions that shorts are paying for you to read, and the share price is above what even a balanced perspective would consider reasonable because shorts are still covering.
Also "meme stock" really just means stocks that had extreme short positions taken against them are discovered by many small money investors that coordinate over social media.
In some cases the short positions are so large they really should be illegal but hedge funds used loopholes. The lack of loopholes in Canada has lead to lawsuits.
So stocks over-shorted by hedge funds and discovered by retail investors = meme stock (at least in many cases.
yes. has been for a while.
Just the robotaxi business alone could be worth hundreds of billions a year in avoided insurance costs and save the average Western family about $5k in transportation costs annually. If it works. Most people don't think it will, but most people thought Amazon wouldn't work either.
For me, it's not that FSD will never work, it's that they're obviously at least 6 years behind Waymo.
For humanoid robots, again, it's not that it will never work, it's that not only is there plenty of competition that's already beating Tesla to the market for the "mostly remote controlled with a bit of automation" model (which is useful, I don't want to undersell that), but also that there will be at least a 5-10 year gap between the AI hardware necessary for a level-5 self driving car fitting in the power envelope of a car, and the hardware fitting in the power envelope of a humanoid robot that can get into a car and drive it (and that a fully autonomous humanoid robot is harder than level-5 self driving).
Energy? Again with the competition: they're one of the worst current brands in the world market — it's not the idea's wrong, it's just that they're the Blockbuster to a dozen would-be Netflixes.
Even with cars, competition from cheaper better models from China and Europe would already be biting Tesla's global sales even if Musk was not angering a significant fraction of what used to be Tesla's core market (upper-middle-class environmentalists).
Elon flies by the seat of his pants. There's no knob at Tesla. There's no robotaxi product or service yet. Viability is way more than a question of pricing.
Elon Musk.
> None of it makes logical sense to me, genuinely is there something I'm missing here?
Fundamentals don't work on meme stocks unfortunately, they work on cult leaders and will react when their CEO does or says something erratic.
Dead Comment
There are twelve separate performance milestones, including Tesla's market capitalization growing to $8.5 trillion and delivering 20 million vehicles. He must also meet product-specific goals, such as 10 million active "Full Self-Driving" (FSD) subscriptions, 1 million "Optimus" robots delivered, and 1 million robotaxis in operation. These goals are separated into "tranches" that must be achieved over the next decade.
* market manipulation to get that valuation.
* using that money to manipulate the government/rules to preference yourself
* anti-competitive behavior.
* valuations based on hype and vaporware. Etc.
wouldn't that be nice.
Dead Comment