Tesla went public on 29 June 2010 [1]. Since then, it has traded 1,677 days. It's average (median) movement, from open to close, is -0.01% (-0.09%). There have been 50 days when Tesla stock fell at least 5% and 53 days where Tesla stock rose at least 5%. So about 6% of the time, historically, it's "tanked" or "boomed" by a similar amount. (By coïncidence, the average >=5% movement is +7.452% while the average <=5% movement is -7.458%.)
Note: this is not a traditional presentation of volatility. Its point is to narrate, not power trades.
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So what should you be looking at? One, there is heavy bearish sentiment around Tesla, representing about 30% of its float [2]. Short interest ratio "is the ratio of tradable shares being shorted to shares in the market" [3].
Two, Musk's reality-distortion field just faltered. None of Musk's companies have ever been realistic about timelines. But having a Goldman Sachs analyst publicly counter Tesla just a week after "Musk said the firm’s new vehicle is on schedule to arrive in July" is a new level of assertiveness.
This is salient given Tesla's short-term need to raise boatloads of money. I'd keep an eye on Musk positioning back-ups to Wall Street through political channels, e.g. low-cost 'infrastructure' or 'domestic manufacturing' financing and/or government contracts, while he repairs his warp field.
I wonder why Bloomberg didn't try to put this drop into perspective, somehow. Surely there are traditional measures of volatility, and they could have presented those. Why didn't they?
The simple answer is that bold statements grab more eyeballs, I suppose. But is that all there is to it?
Because news agencies make money from attention not accurate and usable information. Also, financial market movement has so many factors that govern their movement, that in the short term it looks random but, peoples' daily need for news forces them to put a narrative to almost random short term moves.
Now this movement seems clear but, I can't know and verify for sure unless I have a representative sample of trader sentiments to know why they chose to buy or sell the stock that day.
It baffles me how all these smart people completely don't get Elon or Tesla.
Maybe it's hard to understand for some that money is not the ultimate motivator? I'm pretty sure that Tesla could be a profitable company today if they stopped all investments and just focused on selling amazing Model S (who needs AP2?) (best car ever made in opinion of many reviewers!). But they're a tech company that happens to make cars (among many other things), not a traditional car company. That's why they should be valued at tech company criteria. They're doing what all the tech "unicorns" are doing - burning through cash by investing in stuff that will give them massive advantage in the future. Why profit when you can grow massively? (hello Gigafactory! hello Solar City!)
Sure, I can see how this is not a company to invest in during daily trade. But it's not a company that ever said it's in it for the quick buck. 10 years ago it was failing in delivery of Roadster. 5 years ago it was failing in delivery of Model S and 2 years ago it was failing in Model X. If you ask me, I'd love to fail on the scale Elon and Tesla fail. Unless something really really random happens, Tesla is not going down anytime soon. Sure, M3 is risky, Solar City deal might be iffy, but I think some of the smartest people in the world are running this company, they're not gonna flip it.
I mean, a chat app aims to be valued at $25bn vs a company that delivered almost 200k feats of engineering in the last 10 years and everyone is laughing at their current valuation of $40bn. What is wrong with the world?
If you're planning on holding onto the stock long term, the best advice is to just ignore this and ride it out.
The issue is that mass market auto making is hard, it's intensely regulated, and it has a large potential to cost alot of money to build a factory, acquire the parts you need, and handle any liability issues. Their job is to be skeptical and that makes sense as they're lending out billions of dollars to a company that's going to need tens of billions to get everything working.
As a tech company, Tesla has never delivered a product on time. Worse, it's usually 2-3 years late, not the usual 3-6 months delay for software. At this moment, GM beat the Model 3 to market with its cheaper competitor by at least six months and at industry scale.
Now, bear in mind, I'm an early stage Tesla investor. I bought Tesla at $38 and sold them at $150. I felt they were beyond fairly priced at $150 before they unveiled any self-driving tech. So I've been ignoring financial industry naysayers for years.
My take on Tesla is this: this moment is do or die for the company. It's fine to be six months late or even a year late if they launch the Model 3 with full autonomous driving capability at a price affordable to the upper-middle class. But more could be fatal. Several major competitors are nipping at their heels concerning both EVs and autonomous cars, including GM, Nissan, and BMW among others.
The one best thing going for Tesla is their sterling reputation with consumers. Geeks believe that their cars are magic spaceships and are willing to wait unbelievably long times to own one. Their brand reputation is better than Apple. They must deliver quality and not rush production just to meet the Bolt EV in the market.
> Maybe it's hard to understand for some that money is not the ultimate motivator?
Except that's the whole point of the market. Companies have a fiduciary responsibility to their shareholders. The company has to be motivated by money and growth. Maybe they'll pump out dividends. Maybe they'll take over the world first like Amazon and then pump out tons of cash. Either way - it still always boils down to money.
If a company doesn't care about money, they can be taken over. Their stock price can suffer. Going public means you've decided to be scrutinized. For better or worse.
People who work for Goldman aren't that smart - they're just greedy career-diggers who just look for a quick buck. Just google the mountain of lies that was Spinvox.
Tesla investors are learning a hard lesson that just because a company is cool and makes amazing products, that does not make it a buy at any price. There is almost no way to justify the current valuation and Goldman is simply reiterating that.
I have a really nice coffee mug in front of me right now. Best mug I've ever used. Is it worth 1200 dollars? No.
With a market cap of about $40 billion, I don't think they're learning that yet.
If the price drops to reflect something vaguely resembling the company's current size, rather than wild dreams of massive growth, then they might be learning that. But the current price is still way high if you just look at the present or even the near future.
I often reflect that if Elon Musk died (god forbid) the shares of Tesla would drop to a fifth or a tenth of their current value in the space of a few hours. It's incredible how much a single person can make the difference.
very true in this case, because Elon is a once-in-a-generation, perhaps even once-in-a-century type of person. On the other hand, if he keeps going at this pace for another 15 years, there is a very good chance that Tesla will be the most valuable company in the world. That's the whole risk/reward situation with Tesla, if he dies or loses his abilities with older age, shit hits the fan, otherwise you got a 20-bagger in your hand if you wait 15 years.
wow. The hero worship is strong with you. I agree that he has accomplished some pretty cool things, but calling him a "once-in-a-century" or "once-in-a-generation" person ignores all of the other people who have been as or more successful than him in multiple dimensions of success.
I don't think it's entirely unfair to say he's a "once in a generation" person (once in a century is pushing it), but that has little to do with his actual abilities, and more to do with his perceived abilities. He's got that combination of engineer, businessman and celebrity that people go crazy for. He's the modern Howard Hughes, and people love that. Whether he can deliver on people's expectations or not, he's a rarity.
please name some of these people who have been as or more successful - and don't go by wealth alone. I'm talking disrupting multiple, huge industries with innovative products.
I think Elon has accomplished a lot, but I think you're ignoring the fact that every one of his companies is still surprisingly risky. Tesla might not get another loan and it could go under in a year. SpaceX has fantastic margins, but they still have significant hurdles with failed launches (although this is true of rocketry in general) and navigating a political landscape. Solar City was going under when Elon saved it by combining it with Tesla, a very controversial move.
Elon has yet to run a profitable electronic vehicle company. Elon has yet to run a stable alternative to NASA. Elon has yet to ween the world off its oil dependence. He is working towards all of them and it's great! But he hasn't succeeded in disrupting any of them yet, because all of the alternatives still exist and are as healthy as ever.
An alternative to NASA is an odd and incorrect way of describing SpaceX. NASA is a customer to SpaceX, there is no intention of being a NASA alternative. You could say they want to be an alternative/competitor to the aerospace and defense contractors though
Sure. Alistair Pilkington and Arthur Fowle, between the two of them invented the technologies used to create almost all glass. It might not seem like it's high impact, but from the glass in office buildings, to automotive glass, to smartphone/tablet/TV glass, two highly impactful people who touched more than Elon Musk has.
Allan Alcorn invented Pong. It spawned and inspired an industry that grew to almost $100 billion, and the technologies used in video games have spread, again, to every aspect of technology, to the point that Microsoft used Cortana, a video game character, to leverage name/brand recognition with gamers in one if it's core products.
Bill Gates, for better or worse, transformed the personal computing industry, and has been on a humanitarian campaign for the last several years.
Setting aside food supply management politics, Robert Fraley introduced the first work on transgenic foods and continues to be a strong contributor to modern food science.
Norman Borlaug. "and is credited with saving over a billion people worldwide from starvation" is the best introduction a human could have. If you don't know who he is or what he did, you owe it to yourself to learn more :)
Moving on to relative contemporaries:
Linus Torvalds made Linux, which as you may have heard, has impacted technology a bit.
Tim Berners-Lee and Robert Cailliau basically invented the web and inspired the modern web.
On the tech and financial side, Mark Zuckerberg has done quite well with Facebook, and for better or worse is driving connectivity into unconnected parts of the world.
Elon Musk is a visionary, and is pretty cool, but he is not exactly once-in-a-generation.
I literally laughed out loud at this. Obviously greatness is subjective, but you are really reaching if you think someone saving a billion lives isn't 'on the same level' as Elon Musk who has yet to go to the moon (although I'm sure he will), who has yet to make a profitable car company (this one I'm not so sure about), who has yet to change the energy infrastructure of the world (he's chipping away at this one steadily).
The important thing about history is it's written after the fact. If Elon Musk died today he would be remembered for his work at PayPal and starting several ambitious companies before they achieved financial success. I'd wager that if he died today all of his companies would fail and he would be remembered for trying to do too much and working himself to death before he achieved his goals. He could very well end up as a Greek tragedy.
You are just reinforcing my point. You're listing people that are generations in the past, which is exactly what I said. you're grouping Elon into a once-a-generation / once-a-century type of person.
C'mon, Elon has surpassed all of these guys. Steve Jobs comes the closest, but he was a brilliant designer, not an engineer like Elon. Wayne Huizenga is an interesting character, obvious business genius, but nothing like Elon. Jeff Bezos is brilliant at executing, but he has only really built one company, and is dabbling/nowhere close to what Elon accomplished with space ventures.
Actually Elon isn't an engineer, he has Bachelor of Science degrees in Physics and Economics (Wharton) as well as 2 days worth of a PhD in Applied Physics and Materials Science (Stanford).
What I didn't know was that Jeff Bezos actually does have an engineering degree, a Bachelor of Science in Engineering (Princeton).
I disagree, being an engineer is similar to being a doctor, meaning you go through training and take an oath before officially becoming one. I wouldn't consider a colleague an engineer if they didn't take the engineering oath.
That's to be a registered engineer. It means you can sign off on human-used structures and machines. Lots of people are engineers, and just get a registered engineer to look it over and sign off before production.
>Tesla will be the most valuable company in the world
Slow down there a little bit. They're an AI and battery company. Batteries are commodities and there are several other companies that are working on AI.
Nice of you to take the quote totally out of context. Why didn't you include the words directly before that: "if he keeps going at this pace for another 15 years, there is a very good chance..."
Because that part wasn't relevant. If any company with explosive growth and valuation kept going at that rate for 15 years, they would be the largest company in the world. It's the idea that they'll maintain explosive growth for 15 years selling commodities.
So do you mean he is even above Albert Einstein and his achievements thus far are even bigger than the likes of theory of relativity, invention of airplane? ABSURD. Once-in-a-century is going too too far here.
TSLA is up over a 5 year period, a 1 year period, and 25% in the last 3 months alone. As far as I can tell the only people who learned a hard lesson were those who bought in the last week or so. I believe the lesson they learned is: past performance does not guarantee future results.
The thing I'm really curious is about how much of Tesla stock is self-driving hype? I still believe in electric cars. Also will Elon's web of companies come crashing down when progress on the self-driving front starts to falter?
> will Elon's web of companies come crashing down when progress on the self-driving front starts to falter?
Are you confusing Tesla with Uber? Uber needs self-driving cars to justify its valuation. Tesla doesn't. It just needs production volume. If anything, very near-term self-driving cars might be bad for Tesla because it would reduce aggregate demand for cars.
No, although I think Uber is in dire straits itself. A lot of laypeople buy Teslas not just because they are electric but because of a general feeling that they "are the future." The self-driving dream goes a long way towards driving this consumer sentiment. If self-driving peters out in the way I suspect it will, Musk/Tesla begin to lose some of their luster. If traditional car brands can bring in affordable electric cars which also look good, what will Musk have left? His image is necessary and part of that image is placed in self-driving.
> If self-driving peters out in the way I suspect it will
I think the current capabilities in 'self driving' are already driving a lot of attention and sales. Even if it 'peters out' in a few years with only refinements on the current abilities, people love the idea of a car that can park itself, come when summoned, handle the drudgery of stop-and-go commute traffic, and predict/prevent some accidents.
Those features alone are good enough to make a $35k car very desirable.
Problem is none of those traditional car brands are actually doing that. All they do is show off concept cars at $100k+. Maybe a few more realistic ones from VW but they're all planned way beyond 2020. By that time Tesla will be years ahead and at massive production scale.
I think counting it in decades rather than years is more realistic. So many major innovations are described as being in the next ten years.
If you look at VR, which I think is simple in comparison, you could have experienced it in a high end 90s arcade. It is only now starting to become a mass produced product.
In my view, the current self driving cars look like where VR was before they turned the technology into arcade machines.
I'm willing to believe that genuine autopilot on a subset of limited access highways could come sooner. Which would be very nice to have but doesn't. of course, enable any of the use cases that get people all excited.
At this point, it seems as if everyone feels they need to play this "right around the corner" one-upmanship game less people think they're late to the party.
Wall Street really doesn't like companies doing things with a promised payoff beyond the present fiscal year. That's what they're doing at TSLA. Sure, a lot of it ("Gigafactories!!!!!") is ego driven, not economy-of-scale driven. But they will need the manufacturing capacity as electric storage becomes more common.
Don't forget, TSLA is an energy company. Their present products have wheels because rich dopes like me will spend money on them, and because there's some low-hanging fruit in transportation energy in this decade (not this fiscal year).
But long term their products are going to be as ubiquitous as household electric meters and just as boring.
If I had a bunch of shares of TSLA and a kid entering college, I might sell some of them at the present price. But that doesn't make them a bad investment.
> Wall Street really doesn't like companies doing things with a promised payoff beyond the present fiscal year
The same Wall Street valuing Tesla at $40bn [1]? Tesla is a loss-making company valued at almost 6 times revenues on the promise of profits in many years' time.
Boy are people going to have to do some explaining if Tesla winds down Solar City, which I see as a major possibility.
>But long term their products are going to be as ubiquitous as household electric meters and just as boring.
I'd love to know how people are so confident that it's going to be Tesla that wins this. This isn't Tesla vs GM, Tesla vs Toyota, Tesla vs Ford; it's Tesla vs Everyone. If you were betting, you would really bet on Tesla vs one of about 15 other, huge companies in pool? That seems insane to me.
Why would they wind down a profitable financing arm of the company? Auto makers get a huge chunk of their revenue from financing, as do solar lease companies. Lots of synergy there, and just about zero downside to continuing Solar City operations.
>This is just Goldman trying to get better terms for their loan.
In the vaunted halls of Silicon Valley, maybe. But people in the finance world are starting to wonder if this thing can hold up. Others have been wondering for a while.
Yeah, the top comment on the last article was some schadenfreude filled piece talking about "shorts losing their shirts". Stock is down almost 10% since then.
This narrative explains why there can be no "winning strategy" in equities investment (apart from investing in an index fund). The widely followed analysts who recommend selling TSLA shares based on what they expect to happen, make their prediction come true by speaking publicly (an "announcement effect") -- compare the rate of change in the stock price when the "experts" aren't offering their advice to the public.
It also builds the reputation of the analysts -- the more correct calls they make, the more wise they seem. The more wise they seem, the more the public follows their advice. The more the public follows their advice, the more "correct" calls they seem to have made.
The real winners are those who make their moves the day before the experts speak, which is why insider trading is illegal.
I'm not generally a conspiracy theorist, but Trump is friends with the oil & gas industry, Tesla and the gigafactories are a direct threat to that industry, and GS is embedded deeply in this administration.
Tesla is doing what we as a world should be promoting, that is to stop pushing oil & gas exploration and pushing sustainable energies.
There is an energy war. Tesla is doing better than anyone expected from a science perspective. There is a lot of money at stake in oil, gas, coal, and electricity (in its current form).
I expect this administration to drop the EC subsidies at some point, but retain the O&G exploration subsidies.
The Koch brothers are probably somewhere in this mix as well.
Note: this is not a traditional presentation of volatility. Its point is to narrate, not power trades.
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So what should you be looking at? One, there is heavy bearish sentiment around Tesla, representing about 30% of its float [2]. Short interest ratio "is the ratio of tradable shares being shorted to shares in the market" [3].
Two, Musk's reality-distortion field just faltered. None of Musk's companies have ever been realistic about timelines. But having a Goldman Sachs analyst publicly counter Tesla just a week after "Musk said the firm’s new vehicle is on schedule to arrive in July" is a new level of assertiveness.
This is salient given Tesla's short-term need to raise boatloads of money. I'd keep an eye on Musk positioning back-ups to Wall Street through political channels, e.g. low-cost 'infrastructure' or 'domestic manufacturing' financing and/or government contracts, while he repairs his warp field.
[1] https://en.wikipedia.org/wiki/Tesla,_Inc.#IPO_and_Model_S
[2] http://shortsqueeze.com/?symbol=tsla&submit=Short+Quote™
[3] https://en.wikipedia.org/wiki/Short_interest_ratio
Disclaimer: this is not investment advice. Please don't be a numpty and trade based on Internet comments.