Wednesday, January 12, 2022

Why Tesla's Stock Price Is Too High


 HOW HIGH IS TOO HIGH?

Is Elon Musk himself the chief ingredient in Tesla Motors' trillion-dollar market valuation?

It's true he's been the face of the auto company almost from the beginning. Visionary, but also hypemaster.

HOW MUCH of the current stock price is pure hype?

If the hype is 10%, the stock is overpriced by 10%. If 25%, a 25% overvaluation. And so on.

Tesla fans need to get out of their heads the idea that Tesla is fifteen or twenty times better-- or has a twenty times better future-- than General Motors or Ford. This unrealistic view is based on the most important phrase uttered about Tesla-- whether coined by Musk or one of his team, or one of their fans: "Tesla is more than an auto company."

Is it really?

Maybe at the outset, but legacy manufacturers-- Volkswagen, General Motors, Ford, Hyundai, Mercedes Benz, Toyota-- are scrambling to catch up in tech features, and most importantly, in battery technology.

The Tesla stock price has two props. Two premises. Assumptions which have become assertions.

1.)  Tesla will continue to lead in battery efficiency and distance. (Which is, really, the ballgame.)

2.) Tesla will be first to develop Full Self Driving. True autonomous vehicles.

Do these two pillars rest on quicksand?

Re #1. Tesla may have already lost its ten-year lead. Hyundai's Kona Electric has achieved 637 miles per charge. Nio's ET7, 621. The new Lucid Air is getting more than 500. GM's soon-to-appear Ultium battery is said to be state of the art, as is BYD's Blade battery, which will also be used by Toyota.

Re #2. The assumption that Tesla leads in Full Self Driving rests on the assumptions a.) autonomous driving is soon perfectible by anybody; b.) it will be approved for widespread use; c.) consumers in large numbers will buy it. Beyond that is the assumption Tesla, by not using Lidar (a laser imaging device) has chosen the quickest and safest route to the goal. Maybe. But maybe not.

THERE IS also a third pillar sustaining Tesla's stock price, and that's the stock market bubble itself. Once central banks begin seriously raising interest rates in order to quash inflation, what will result? We'll find out.

WHAT IF?

The entire move to EV's is contingent on battery tech continuing to improve-- batteries becoming more efficient and EV's more affordable. But what if this doesn't occur? (Just as autonomous driving remains a "What if?") Look closely into it, and much of the Tesla strategy remains a huge gamble.

ELON MUSK 

The most worrisome part of the Tesla stock price bubble is Elon Musk himself-- that the company is completely dependent upon one man. The sole face of the company. The corporation's entire PR department in one individual, an individual who reportedly works 80-plus hours a week. What's sustaining him? What happens when Elon Musk burns out?

COUNTERARGUMENT


Musk is far more of a gambler than innovative capitalists of the past like Edison, Ford, Steve Jobs and so on, which has been Tesla's strength. He pushes ahead with his ideas and decisions and expects the company-- and the world-- to catch up. Which means he and his company can move and maneuver way faster than any automotive company ever seen. Which also means that in the face of sudden obstacles, the company may move quickly to correct him. (That Tesla may use something akin to Lidar after all, as rumor has it, may be one example of this.)


THE KEY QUESTION

The key question is: Will Elon Musk's luck run out?


Monday, December 13, 2021

Elon Musk and the Myth of Invincibility


 THERE ARE numerous reasons to think the stock price of Tesla Motors is way too high. Foremost among them has to be that the valuation is based on the hyperbolic persona of one person: Elon Musk.

To date he's tangled with co-founders, critics, banks, regulators, competitors, media, and always comes out on top. Which doesn't mean this will continue. The one person in fact who can least afford a public setback is Musk, for this would puncture the bubble of perception about his unstoppable genius.

In this regard, the historical example most analogous to his situation is that of Napoleon. You know: the French conqueror who at the height of his success crowned himself emperor. A giant setback was sure to follow-- and did, when Bonaparte invaded Russia, then quickly enough had to leave, his much-lauded army vanished in ice and snow.

There's a kind of immutable law in the universe which decrees if you get too high, too hubristic, you're due for a devastating crash.

Anyway, I wouldn't bet against it.

Wednesday, November 24, 2021

Elon Musk's Tesla Motors Gamble


 IF I were heavily invested in Tesla Motors-- or shorting it-- right now I'd be scrambling to find objective analyses of the company, its cars, and its stock. Yet objectivity is in short supply on the topic. Polarized are the competing voices: Tesla/Musk fanboys versus vociferous shorts and critics.

THE GAMBLE

From the beginning Tesla has been a historic gamble. Elon Musk and his partners spotted an opening in the universe and decided to jump through it: be the first to build an exciting, marketable, competitive electric car. The gamble has paid off tremendously-- Tesla Motors sitting at a trillion-dollar valuation. But it still is, as it's always been, a race against time.

The Gamble: Create and dominate the Electric Vehicle market before established manufacturers gear up to stop you.

I'm from Detroit. My dad worked in auto plants most of his life. One of my older sisters dated a high-level General Motors manager. I worked in an auto plant-- Dodge Truck-- right out of high school. I worked on cars with my dad from when I was eight. Growing up I was steeped in car culture, and more, in car industry culture. Based on John DeLorean's sad story, as well as the movie "Tucker," I was taught to believe it's impossible to build a car company from scratch and compete with the giants. Too much knowledge and expertise required, too many resources involved.

To date Tesla Motors has fifteen manufacturing plants of all kinds around the world both operating and planned. General Motors alone has 122, half of which it claims can be converted for EV manufacture.

Tesla's gamble is akin to the gamble taken by the German army in the summer of 1941 when it invaded the Soviet Union in Operation Barbarossa. (Sorry for the analogy, but I can't come up with a better one.) Or: Invade Russia, get to Moscow and defeat the decrepit regime before said regime can mobilize its enormous resources and population to stop you-- and before the brutal Russian winter does likewise. Even maniacally overconfident Hitler knew the risk. He's quoted as saying it was like opening the door to a dark room, in which you don't know what awaits on the other side.

History shows the Germans won many battles, had phenomenal success, but it wasn't enough. They lost.

Is this the fate which awaits Tesla Motors and Elon Musk?

(I'll have more to say on the topic.)

Thursday, November 11, 2021

The Band Aid


 HYPER-CAPITALIST overconsumption has swept the planet, based upon three pillars: monopolistic multinational conglomerates, big box stores, and the Pavlovian nightmare demand-creation machines of television and the Internet. Step back to assess it holistically and it becomes a many-tentacled monstrous Machine far outside human scale, overwhelming we humans.

What's the response of the self-appointed Harvard-centered left?

They've decided to place a band aid on the leviathan. Many fervent debates, disputes, and protests around the edges. "If we can only make life a trifle better for the working class. Not diminish or break up or tear down the monopolies, or turn off the flow of babble from their electronic media adjuncts-- never that-- but maybe get a few extra benefits for those trapped within the unceasing madness!"

THUS a bill is passed to place said band-aid upon the Machine. A committee is delegated to perform the feat, to many media features and much celebration. "We did it" proponents proclaim. "Yaaay!" unknowing fans shout, prodded by their smartphones, televisions, and other brainwashing devices. 

The day arrives. A tiny object is placed onto the ever-growing monster. The delegation proudly returns. The job: done. After confetti and parades, the delegates returned to their plush offices, life has become once again calm. Except for the ever-throbbing Machine of course.

Those the solution was supposed to help glance at the Machine, squinting, trying to see what is now upon it. They move closer. They spot something. They realize what was stuck after all upon the Machine was not a band-aid, but a happy face.



Wednesday, October 20, 2021

The Believer Mag Shuts Down!

 My past antagonist-- but there is no joy or gloating in this corner. No, even though the magazine trashed the Underground Literary Alliance with an egregious and highly inaccurate essay by Tom Bissell way back in 2003.

HOW inaccurate? There's a four-part takedown of the essay by moi visible on one of the side bars on this page.

Why no celebration? Because the culture needs all the prominent literary magazines it can get. For almost two decades The Believer was a highly visible member of the species. Their essay was contentious-- and if there's anything the sleepy world of Literature lacks and needs is noise and contention.

Freedom of speech means the right to be wrong.

MEANWHILE, the lack of complaint and outrage on the part of University of Nevada-Las Vegas's faculty and students gives the impression they're okay with their "university" being treated as a mere adjunct to a highly-touted sports program.

Are they? Can The Believer be saved?


Thursday, September 30, 2021

Jonathan Franzen: Voice of the Establishment?


CURRENT NEWS in the Big Four publishing world is that Jonathan Franzen has a new 592-page novel coming out, Crossroads. To me, Franzen represents the voice and ideals of today's upper-caste establishment, in the same way James Gould Cozzens and John P. Marquand represented that voice in their time. With Franzen we get inferior Cozzens-- By Love Possessed-- and not a Guard of Honor

The factor which caused Cozzens to write a significant novel-- despite his blinkered views on life and the world-- and not just another novel of manners, was his involvement in the Second World War, which placed him at the center of a massive and quickly-growing bureaucracy, the U.S. Army Air Force. He was able to put his strong observational talents to work observing and learning the workings of a gigantic organizational machine, along with the strengths and weaknesses of the too-human individuals who ran and populated that machine. Out of it came one of the most important of all American novels-- important because it caught America at a moment of vast change: transformation from isolated backwater to global empire. Any person in decades and centuries to come wishing to understand that nascent giant can do no better than to read Guard of Honor.

It's Jonathan Franzen's misfortune that he's been involved in no epochal, life-changing event, and hasn't challenged himself-- has failed to push himself into the world much beyond his limited upper-east side Manhattan horizons, and so has nothing to write about except the same recycled family scenes, stuffy and uninteresting (to this commentator anyway), which appeared in The Corrections, and apparently are in the new book as well.

Friday, September 24, 2021

Race to the Bottom

THE PROBLEM WITH CHEAP

The economics of Cheap cramps innovation, contributes to the decline of once-flourishing industries, and threatens our proud heritage of craftsmanship.

The above is a quote by Ellen Shell in a 2010 book titled Cheap, about the race-to-the-bottom taking place in the American economy-- one which has led to a culture of shoddiness.

CHEAP ARTS

I've been thinking, prodded by this book and others like it, that no one has been more affected by this race toward cheap ubiquity than the individual artist. Especially devalued over the past twenty years has been the work of musicians and writers.

Musicians: due to the Internet and streaming. All music is instantly available-- one no longer needs to travel to a store to purchase it, much less attend a live concert.

Writers: due largely to Amazon, which has made virtually every book ever published quickly available with a few clicks of a mouse. Ebooks have only added to the mass of authors and titles, drowning the reader in the number of choices, but also the authors themselves. It's becoming impossible for any one writer or book to stand out. Every writer scrambles for their niche, or really, their micro-niche.

WHAT'S THE SOLUTION?

A number of tactics can be used to reverse this situation. One is to make the work less readily accessible. This includes a return to analog, taking lessons from the comeback of vinyl records, as I discuss here. Another, related tactic is to strongly increase the quality and uniqueness of the individual work, thereby boosting its value. The idea being to make the artwork more of a rare and valued object. A collector's item.

Our zeens, now on sale at New Pop Lit's POP SHOP, are an expression of these tactics. Hand-crafted, available only via snail mail, totally unique, they return the concept of value to the literary realm, amid a universe of the generic and cheap.