Tesla

Today's newsletter from Chartr is all about Tesla. (Actually Monday's newsletter, but close enough for me.)

Tesla Operating Profit

If you bought shares of Tesla early, as in any time before 2021, you're sitting pretty. Ever since then it's been a gamble. Shorting Tesla, that is, betting that the stock price is going to collapse, has been a popular sport, and with the P/E ratio (Price to Earnings) sitting around 70, shorting the stock still looks like a good bet. Normal industrial stocks have a P/E ratio of around 20 - $20 of stock will net you one dollar of earnings every year. Now if you think Tesla is going to continue to grow exponentially, you might be willing to gamble on it. However, from looking at the above chart it looks like the growth is no longer exponential. But given the stock's performance, it kind of looks like the people who are buying Tesla are not hard headed finance guys, but ordinary folks who are operating on emotion, and those people love Tesla. From Chartr:

Much of that meteoric rise has been down to everyday investors that Musk has converted into a legion of loyal, often loud, devotees — who aren’t afraid to put their money where their mouth is.

Tesla Share Price History

Tesla cars are impressive, and if you have money to burn, go ahead and buy one of the cars or some of the stock. But if you buy one of the cars and the electronical slankerator goes tits up in five years and they want 50 G's to replace it, don't come crying to me.

Electronical gizmos are all very well, but like all gizmos, some of them are going to fail. Some of those failures will be easy to fix, but some will prove impossible to fix. The odds of that happening are low, but you should prepare yourself mentally. Should you get hit by the gods of bad luck, you may need to just have to take the hit.