Shares of Tesla (TSLA) are up about 10% in 2015, which is nothing special for a company that seems to have an agenda to out-special every other high-performance car company out there. And it does a pretty good job of it. If you have never been wow’ed by a car, take a test drive in a dual motor version and learn what ludicrous acceleration feels like.
The stock is holding up well for a company that’s so speculative that investors either hate it or love it. One reason is that unlike most Nasdaq leaders, which have fallen 20% or more from all-time highs, shares of Tesla Motors did not soar to new all-time highs this year. What didn’t go up, needn’t come down.
While I’m a long-term Tesla bull, I’m not bullish on the stock short term. The reason is simple: TSLA has an unfilled gap between $225 and $230 indicated by the red channel on the accompanying chart. These gap zones represent irrational exuberance, which always gets corrected by Mr. Market.
The other bearish technical factor is the Volume Profile Point of Control sitting at $247, which will act as a resistance level now that price is below it. So the gap fill is the short-term play.
That said, a gap fill might represent an attractive entry zone for longer-term investors. I say that because I expect that Tesla will be worth north of $500 billion in 10-15 years regardless of its GAAP earnings, book value, ROI, P/E or other standard fundamental metrics.
It will be priced by the stock market like other disruptive companies that dominate their niche, such as Netflix. Tesla is a revolution hidden in plain sight and to measure it one needs a different ruler. Just as Apple is no longer a computer company, in 10-15 years Tesla will be a completely different company than it is today.
Like Apple, Tesla’s mission is to give consumers something that they don’t even know they want or need. I bet you never thought you wanted a 700 hp car that runs on sunlight. But once you drive one, you won’t be able to live without it. By the way, Henry Ford didn’t ask his customers what they wanted: “If I had asked people what they wanted, they would have said ‘faster horses.’”
If the parallel holds true, Tesla is not a car company that simply builds faster cars. It’s doing something else entirely.
So consider this: Is a fully connected car still a car, or does it start to resemble something on a higher dimension, i.e., a Transportation App? Do you see the difference? I believe that Tesla is delivering an exceptional transportation experience, not a car. The car is simply the vehicle for the realization of the experience.
Bottom line: The transportation industry is about to experience disruption. Consider investing in the disruptors.
