New York Times Claims Tesla’s Best Resource Is Its “Story” — Not Its Cars, Batteries, Solar Roof Products, Self-Driving Tech, Etc…

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A recent article from the New York Times put forward the argument that Tesla’s primary investor/stock selling point has been its “story,” and that its products and services are (and will be?) secondary to that.

Here are some excerpts from that article that seem worth highlighting here (tip of the hat to “KNS” on the GM Volt forum for this):

“Tesla has ascended into a rarefied realm of so-called story stocks — companies that have so bewitched investors that their stock prices are impervious to any traditional valuation measures because their stories are simply too good not to be true. …

“These story stocks — the term was coined by James Montier, a value investor and a member of the asset allocation team at the investment management firm GMO — are relatively rare, but hardly new. Amazon’s stock surged for decades even without any meaningful profits. A more recent example is Snapchat’s parent, Snap, which is racking up large losses while its stock trades at an astronomical price-to-sales ratio of nearly 50, far higher than Tesla’s 7. (Ford’s, by comparison, is 0.3.)

“Amazon and Snap both have stories that are compelling for many investors: Amazon has transformed retailing and is destined to dominate it. Snap is reinventing communication, at least for millennials and those even younger.

“‘Stories are great before bed, but are disastrous as a stock-selection technique,’ Mr. Montier wrote in his 2009 book Value Investing: Tools and Techniques for Intelligent Investment.

What do you think? Does that last bit have much relevance to Tesla’s market position?

Also from that New York Times article:

“Ron Baron, the billionaire investor and founder of Baron Capital, disclosed last year that he owned about 1.6 million Tesla shares. He predicted on CNBC in February that Tesla shares would quadruple by 2020 and triple again by 2025. By then he expects Tesla to become the largest company in the world as measured by market capitalization.”

Personally, I’ll say that I’m skeptical that Tesla’s current position (and stock price) is inflated much or at all (with relation to the rest of the market — the market as a whole is very likely facing a downturn within the next few years).

With regard to growth potential, that really just seems to come down to how things go over the next years … particularly with regard to the Model 3 launch, the Model Y launch, the company’s self-driving tech development, its solar roof products, and the growth of its energy storage business.

Related: Tesla Stock (TSLA) Soars & Passes Ford (F) On Record Production, Model 3 Progress, & Maybe Some Fake News?

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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