StarFoxisDown!
Well-Known Member
Pretty much all of the "reasons" for the massive draw downs in valuation across the board don't apply to TeslaValuations took a huge hit this year so far, because of rising interest rates as cost of borrowing goes up. However, I feel that Wallstreet does not look at how this impacts each individual company. Tesla with its low debt is practically immune to rising interest rates and deserves massive credit for that.
- Interest rates rising? Tesla doesn't have any debt and has plenty of FCF for expansion/growth
- Inflation causing margin compression? Tesla has demonstrated pricing power that more than compensates for inflation. People will point to gross margins declining this quarter as a "Aha told ya!" yet they completely lack the understanding that the entire reason for the drop in gross margin was Tesla reallocating cost associated with Austin/Berlin to COGS
- Inflation/Price hikes hurting demand - Main culprit of inflation is gas/energy prices. Tesla's products are inherently deflationary items which keeps demand high. Tesla has a half year wait list at minimum even after huge price increases in the past year.
Tesla is probably the most inflation and recession proof company I've ever seen thanks to their insane level of efficiency with operations and the fact that their productions are part of a long term secular disruption AND are deflationary to the exact cause/reason of inflation.
TSLA should not only be trading at a one trillion market cap this very moment, but if Wall St had any foresight, it would be higher than it's ATH at the beginning of the year.