04.04.24
The Past could be a great source of knowledge...
Not necessarily the events of the past, more the processes, what we learn from them and use the methods of analysis going forward.
We obviously can't predict the future, but we are doing it never the less, in every aspect of our lives.
Why did a very smart analyst predict on May 21, 2019 that TSLA stock could drop to $0.66 ($10 adjusted to x 15 splits) within 1 year from $13 adj, TSLA stock was at the time?
He was Analyzing of course.
He was highlighting some concerns indeed, though missing the forest for the trees.
In a parallel world his prediction could have actually come to life.
We all know now how stressful financially 2018 and 2019 were for Tesla and the CEO.
But, analytics must include a likelihood measure and an even handed perspective to other aspects that could over come these concerns.
TSLA stock has gone from that $13 level down to $12 immediately following this call, but...
1.5 years later to $283.
2.5 years later to $409.
Now it is $175.
Stocks could be detached from their story and go both ways erratically.
All we have as investors is to analyze if the positive or negative hype is associated with fundamental promise or a failing company.
Some stocks could indeed maintain a detached hype both ways for some time until reality surfaces...
NKLA, FSR(N), MULN, VFS.
On the other side you have stocks that drop undetached to actual performance, Fundamental or promise.
That drop too occurs for short term highlighted concerns and is not sustainable for a long time, and eventually the stock will catch up with reality...
TSLA, NVDA, META and others.
It is all about how we analyze the data and whether we are trying to time the market short term (good luck) or trying to identify a long term vessel for investment as well as additional opportunities for buying those vessels (when the determined, analyzed, long term choice is negatively hyped).
Back in May 2019, after a lower delivery Q1 (for "good" reasons), lower Q1 earnings, 63k down from 91k QoQ, still burning cash, but at the cusp of turning into Profitability, one had the choice to highlight short term risks or long term promise that could happen any time.
Tesla as a company is executing it's long term strategy very impressively, despite all concerns and challenges.
The promising projects are all moving forward, though it is impossible to determine which ones are going to return the hype and when will that happen exactly.
However, Tesla, brilliantly, despite the politically motivated criticism, avoided debt and stock reinvestment and stayed far away from any financial risk to the company while maintaining profitability and increasing cash quarterly.
Tesla has been preemptively lowering prices, mitigating the risks of temporary "Slower growth", peak of Interest rates and Inflation and lower margins.
All while ICE companies are getting drunk from continued ICE profits (not for long), delayed ZEV limits by a friendly government to unions and Legacy Auto (although a conservative government will be friendly to this policy too), promising Plug-in incentives on any car with a 7kwh battery.
Legacy ICE industry decided pretty much all together to ignore the EV threat, stop hyper investing, limit cash bleeding and losses, and ride the ICE/Hybrid train as much as possible with support from Unions and governments.
This immediately shows up positively in short term results, profits and margins.
I guess Tesla in Q1, 2024, 5 years later are going through a similar pattern, 387k down from 485k, QoQ.
Short term or Long term, is the name of the game.
Opportunity? or begining of the End...
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