I respect people who not only state their opinions, but leverage those opinions. You seem to be one of those.
@bonnie is the prototypical well-informed early stage investor. I respect that too.
My own history has included both short positions and long ones, with a decent amount of highly leveraged positions over the few benighted years when I was enamoured of Black-Scholes (in 1973 it was all the rage and I had access to an IBM 360-195, so I was utterly convinced) and ignored the boundary conditions, so my enthusiasm was short-lived). Luckily for me I quit long before Scholes and Merton. Then I became a consultant to some which narrowly avoided disaster in 1998. (Long Term Capital Management is the reference. he who ignores boundary conditions will lose, sooner or later.
Back to
@bonnie. She did an enormous amount of homework before making a highly speculative investment. Here posts here have demonstrated the truth of that statement.
FWIW, since burning myself in the early 1970's I have been very, very careful to know the difference between my beliefs and facts. The most adamant bulls tend to ignore fundamentals. The most serious shorts do that too. Both of those are over-represented among TSLA investors.
A handful of often-ignored facts seem common to both:
1. They tend not to understand how growth rate affects earnings. (the poster child of the moment probably is AMZN);
2. They tend not to understand capital intensity in industrial companies (corollary: large investments always affect P&L negatively while they are happening);
3. They tend not to understand what happens when the inevitable delays end and serious production begins( two of my favourite examples are the Boeing B747 and B787);
4. They tend to ignore the emotional roller coaster that the three first items engender in securities markets;
5. They tend to overvalue opinions of grossly uninformed securities analysts.
So, since the mid-1970's I have invested only in things I think I understand, sort of like an updated Graham/Buffet approach [I hope].
That has mostly provided quite nice returns, but also requires inordinate amounts of time because when I no longer think I was well-informed I do sell.
I no longer leverage any of my investments. (of course one needs a certain amount of financial resources to do that)
Now for TSLA: I have given up trying to explain the investment life cycle when one tries to adopt new technologies. (e.g. Boeing B747 engine failures, B787 battery and diagnostic failures, Tesla products, all of them). Delays, mistakes and redesign abound. Product reliability for early adopters is horrible. Famously, securities analysts predict failure. As a serial early adopter (a few: NSU RO-80, Mazda R-100, Cessna Citation C525 (SN 41), Apple Newton). All of those worked poorly at first. Two of them were bought back by manufacturers, one went broke, the others nearly did. So, how does Tesla fit in?
I bought into TSLA early, but much later than did Bonnie. I flew to the US, rented an early Model S, was convinced the product could be successful, then studied everything I could.
Tesla developed what have become sustainable advantages in my opinion:
1. The cell-level quality control (check out the full transcript to the NTSB hearings on "lithium-ion batteries in transportation:
https://www.ntsb.gov/news/events/Pages/2013_Lithium_Batteries_FRM-Presentations.aspx
https://www.ntsb.gov/news/events/Documents/2013_Lithium_Batteries_FRM-Panel3d-Mikolajczak.pdf
Anyone who takes the time to study those documents will understand that Tesla, and only Tesla, figured out how to safely, dependably and practically deeply li-ion batteries in cars. When they presented that Tesla had NEVER had a non-induced thermal runaway I knew they would conquer other engineering feats too. At the time not one li-ion user other than Tesla had such a record. Nobody else tracked and tested every single cell. Not Boeing, US Navy, nor any manufacturer.
2. The Battery Management System, nobody else had anything like it. Relatively cheap too, since it was essentially a Mercedes-Benz auto A/C system.
3. The entire approach to controls and performance built around continuous improvement and OTA updates. They did that ten years ago any nobody yet as really figured out how to replicate it.
4. The insistence on direct distribution;
5. Supercharging and Destination Charging.
Then I examined all the capital they had used to do all that and realised they are the most efficient user of capital in the automotive industry.
So, I bought in at $50 and have been regularly adding since then, even with some shares added at >$360. I'll keep adding.
Volatility comes with all that, especially with Tesla Energy having just begun to make credible deliveries, new factories for China, Model Y, Semi, Roadster and new soon to come larger scale utility/industrial products plus solar tiles. There will be more.
All that is unproven, so people will short the stock for some years. Shorts will continue to make and lose fortunes as they try to evaluate something that no statistical model on earth can evaluate. Why? All such models are stochastic and thus use past history to predict future actions. They are great when "all else remains equal" and all the boundary conditions do not change. TSLA is all about discontinuities. The models will not work with discontinuities.
Studying TSLA financial reports carefully will demonstrate that they will have a fairly easy time raising capital. Among other notable things many of their most valuable assets are not even ascribed value on their balance sheet, and even Gross Margin is understated by a considerable margin. Thoughtful people can recast the P&L on a steady-state basis, and can evaluate the assets based on market values. Those things are not achievable in GAAP, which is not intended to cope with very high industrial growth.
Shorting TSLA is popular, no doubt about that. It is also perilous, be sure about that.
