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Tesla = TSLA

02/24/2018

It is important to know what you don’t know, and I know that there is much I don’t know about technology stocks.  As a result, I am slow to invest in technology companies that I don’t understand.  I did not buy Apple or Amazon when they first offered stock to the public.  Maybe, that is because I have watched so many technology companies go public and then disappear.

However, one technology company is getting interesting to me – Tesla or TSLA.  The company was named after a Serbian engineer, who died in 1943, after greatly advancing our understanding of electricity.  The company is known as just another car company, that also happens to make electric cars, but that is misleading.  It is a battery company that also happens to make electric cars.  Those batteries are lithium-ion batteries that require little maintenance, weigh much less, and last much longer than the one in your car today.  (Yes, there is a fire problem, but that is a decreasing problem.)

An interesting anecdote is that when there was powerful storm that knocked out the power grid of South Australia in 2016, Tesla offered to fix the problem within 100 days or he would do it for free.  He did it only 60 days.  He set up solar panels that absorbed enough sun light to power the lithium-ion batteries that supplied energy to their power grid.  Amazing!

The analyst community is deeply divided on this stock.  Argus calls it a BUY, Reuters and The Street call it a HOLD, while Standard & Poor’s calls it a SELL.  The primary concern seems to be the heavy debt load.  One worrisome problem is the iconic but mercurial CEO, Elon Musk.  How thin can he spread himself?  This founder of PayPal is also CEO of SpaceX, shooting rockets/satellites into orbit.

Because it is selling for about $350/share now, I will continue to watch.  However, it dropped down to $311 when the market had a minor correction earlier this month.  I will revisit this question when the market re-tests the bottom, as I expect.

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