Over the last half year or so, Tesla’s market value has risen substantially, surpassing that of Nissan Motor Company at points (including right now) and putting it within a hand’s reach of the two top American auto firms — GM and Ford.
Along with this rise in market value, many market analysts have been making the case that Tesla stock is overvalued more than at any previous point in time. Obviously, though, how is that being determined? Who is actually overvaluing the stock? How much of the eventual outcome is determined by the ratings of various “experts?” And, for that matter, what motives and insider data points inform these ratings? Does any of this actually matter much with a stock like Tesla, where a notable portion of the money invested is by stubborn “true believers?”
While I got some pushback earlier this week with regard to my article on the decision by Goldman Sachs to lower its rating on Tesla stock, the point that I was making is one worth actually considering — the analyst approach to rating Tesla stock, and the reasons given publicly, won’t likely have too much to do with the actual long-term performance of the stock. Even the short-term impact of a Model 3 launch delay, as anything but a nice means of making money on the dip, is something that I’m very skeptical of.
With the market share and customer goodwill that the company has built up to date (as a reminder, worldwide, not just in the US), the company is looking very likely to expand rapidly over the coming years — and to conquer more and more of its competitors’ territory throughout the automotive, energy storage, solar, and on-demand taxi service sectors.
A potential delay of the Model 3 launch (which may very well not even occur) would be seen by most investors as just that: a delay. Attempting to spook long-term investors with talks of potential events that aren’t likely to be too relevant over the long term may be a commonly used approach of market “analysts,” but that doesn’t mean that it doesn’t deserve to be called for what it is. When the company’s stock has clearly become something of a political and ideological statement for many investors, why would they sell en masse just because of a temporary delay?
Yea, the market is complex. Yes, there are many ways of thinking and theorizing about the market and “economics” that are taken as gospel. And, yes, I am very much a skeptic of many of them. Feel free to disagree with me in the comments below.
The situation that I see is that over the long term, Tesla’s stock will continue rising, in spurts, at a respectable rate. You can sell and re-buy the stock repeatedly if you want to try to make money on the frantic groupthink fluctuations that see the herd stampede back and forth based on the appearance of truly minor events (as far the company’s actual long-term outlook and viability), which is how so many traders “make” the money that they do (and others lose it), or you can put some money into the company (or not), and accept that the outlook (Model 3 launch delay or not) is pretty damn good.
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