In a ridiculous piece written by Matthew DeBord for Business Insider. Matthew thinks that the secret to Tesla’s upward stock movement is due to “love”.
In the alternative reality of Tesla — which isn't an alternative because we're really living in it — people both love the product and love the brand. That's what the elevated stock price, so out of whack with the business, represents. And that's why it game-over for the bears.— Matthew DeBord, Business Insider
The response to Matthew from any financial analyst will be to immediately ask, “If people love Tesla’s products so much, why is Tesla having to cut prices to move metal?” Lowering prices to sustain or increase shipped units is called a demand problem. And also, if there is so much love for Tesla, then why is growth stalling everywhere except China?
A few crazy fans of a line of automobiles is called a niche market. That’s nothing new. If Matthew thinks that the love of EV fans for Tesla is any greater than muscle cars fans for Mustangs and Camaro’s or racing fans for BMW’s M cars he is sorely mistaken. The crazy part is that there would be a multi billion dollar valuation attached to this niche market.
Even Tesla Bears have long acknowledged the rabid Tesla fan base. But this relatively small group is irrelevant to the equation. The big question is whether Tesla can make the jump into the lives of people who consider cars nothing more than an appliance. Up until now these people either don’t care about Tesla or are repulsed by them. However, all financial models for future growth are based on this group. Not the fans.
The problem with Matthew’s Thesis is that if and when EVs go mainstream it won’t be these diehard brand lovers who buy the cars. Tesla’s valuation is built upon the supposition that Tesla will cross over and non-fans will buy the car in the future. It’s the exact opposite of Matthew’s message. The stock price isn’t built on fandom.
The Japanese have already demonstrated how you march into someone’s backyard and steal their market share. If you want to grab the mainstream auto buyers, you do it via quality and reliability. People who buy crazy cars with quality issues are called niche car buyers.
Matthew is also wrong that the world has never seen anything like Tesla’s stock price getting unmoored from fundamentals. It happens all the time. It’s called a bubble. A temporary inflation that will get corrected in the future. The Tesla bubble is longer than most, but a bubble nonetheless.
The response to Matthew from any financial analyst will be to immediately ask, “If people love Tesla’s products so much, why is Tesla having to cut prices to move metal?” Lowering prices to sustain or increase shipped units is called a demand problem. And also, if there is so much love for Tesla, then why is growth stalling everywhere except China?
A few crazy fans of a line of automobiles is called a niche market. That’s nothing new. If Matthew thinks that the love of EV fans for Tesla is any greater than muscle cars fans for Mustangs and Camaro’s or racing fans for BMW’s M cars he is sorely mistaken. The crazy part is that there would be a multi billion dollar valuation attached to this niche market.
Even Tesla Bears have long acknowledged the rabid Tesla fan base. But this relatively small group is irrelevant to the equation. The big question is whether Tesla can make the jump into the lives of people who consider cars nothing more than an appliance. Up until now these people either don’t care about Tesla or are repulsed by them. However, all financial models for future growth are based on this group. Not the fans.
The problem with Matthew’s Thesis is that if and when EVs go mainstream it won’t be these diehard brand lovers who buy the cars. Tesla’s valuation is built upon the supposition that Tesla will cross over and non-fans will buy the car in the future. It’s the exact opposite of Matthew’s message. The stock price isn’t built on fandom.
The Japanese have already demonstrated how you march into someone’s backyard and steal their market share. If you want to grab the mainstream auto buyers, you do it via quality and reliability. People who buy crazy cars with quality issues are called niche car buyers.
Matthew is also wrong that the world has never seen anything like Tesla’s stock price getting unmoored from fundamentals. It happens all the time. It’s called a bubble. A temporary inflation that will get corrected in the future. The Tesla bubble is longer than most, but a bubble nonetheless.
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