Tesla’s stock has remained a polarizing topic, especially as the corporate reaped significant losses throughout the last 12 months. Bears and bulls alike may have to deal with Tesla’s incredible growth and industry disruptions over the past few years, but an argument between the 2 in recent weeks is pointing to the corporate’s margins, overall valuation and, unsurprisingly, its automobile business.
Above: A Tesla logo on a automobile (Image: Austin Ramsey / Unsplash).
A recent debate between Tesla bulls and bears broke out during a Wall Street Journal online Q&A event featuring Tesla bull Ross Gerber, bear Jim Chanos and live markets author Gunjan Banerji (via Barron’s). The unique 30-minute event was broadcast continue to exist WSJ’s website, featuring live chat questions from viewers with Gerber and Chanos answering, while Banerji moderated between the 2.
In brief, the talk got here all the way down to Chanos believing Tesla is actually just an automotive company, adding that the automaker is overvalued and that its high margins will eventually fall to satisfy industry averages. Gerber argues that Tesla’s many focal points beyond the automotive make its extra margins justifiable, including its software, service and energy businesses, and its continued expansion of each EV and battery manufacturing.
“Because the world transitions to a clean energy and transportation future, there’s only been one company that’s driven this amazing innovation in electric vehicles, and now in energy storage.” Gerber said. “And Tesla is that this company.”
Gerber is the CEO of Kawasaki Wealth and Investment Management, while Chanos is the founding father of Kynikos Associates. Gerber owns shares in Tesla, though Chanos is brief the corporate’s stock — effectively meaning that he advantages from its shares dropping in trading price.
Throughout the conversation, Chanos claimed that Tesla performs like a automobile company available on the market, slightly than like a software or tech company.
“[Tesla] looks exactly like a automobile company,” Chanos said. “It doesn’t have software margins; it has auto OEM margins, and that’s only a fact.”
Gerber identified in response that the vehicle is a driving tech product, with an ecosystem not unlike Apple’s ecosystem.
Barron’s argues that neither Chanos nor Gerber got it quite right, saying that every of them focused on old news. Chanos didn’t acknowledge the financial advantages of the Tesla Supercharger network, or its margin advantages from bypassing a dealership model altogether.
Other topics deliberated upon throughout the session included Tesla’s Full Self-Driving and the automaker’s role within the Chinese market.
Even though it isn’t possible to predict how Tesla’s stock or will perform, current analyst consensus puts Tesla at roughly 1.8 million auto deliveries in 2023. And Tesla’s earnings call this week confirmed these high expectations. Either way, it’s more likely to be an exciting 12 months for Tesla’s EVs with the approaching Cybertruck, and continued expansion of its energy, charging and auto production businesses.
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Source: Wall Street Journal / Barron’s