5 reasons why Tesla is my top stock pick to hold through 2030…and 1 reason not to!
THE DATA - Most people look at Tesla as just a car company with some really cool features. In reality, Tesla has invested billions of dollars into super computers, software, robotics and data collection installed in every vehicle they produce. As of today, there are more than 7 million vehicles collecting data and sending it back to Tesla every day. Tesla has the ability to collect data like road conditions, car colors, other vehicle driving patterns, as well as pedestrian & bicycle behaviors. No other company in the world has access to this type of real world data and Tesla is preparing to put it all to good use. Tesla today, reminds me of Amazon when people use to say “Amazon is just a bookstore!” I don’t people have a full appreciation for the infrastructure that Tesla has put in place that will change the paradigm of tomorrow’s world.
SPEED OF INNOVATION - Tesla and Space-X have been recruiting the top engineers from all of the elite engineering schools for over a decade now. When Tesla is scooping up all the best engineers, how is a competing company that has to utilize the 5th, 6th and 7th best engineers going to catch up? They can’t! Tesla innovates faster than its competition and that innovation spurs faster innovation, which in turn just accelerates the pace in which Tesla continues to break away from competition. The improvements that Tesla is making with each updated version of its Full Self Driving software is occurring at a staggering velocity.
SUPERIOR EFFICIENCY - Tesla is the only company in the world making EV’s with a profit, other than BYD, who barely makes any profit at all. Where most car companies make minor changes from year to year, Tesla makes significant changes to their vehicles almost weekly. Their system to propose a change, test the efficacy, remove red tape and then ultimately implement that change, occurs almost at the speed of thought. It’s been said that Tesla’s advantage is not its ability to build the machine, but rather its ability to “build the machine that builds the machine.”
FSD - Yes, I know that Full Self Driving has been promised for years with nothing appearing, while Waymo runs around driverless in a handful of cities today. However, Tesla has taken the long game approach and it is the approach that with both prevail and dominate, in due time. Waymo has to pay for all the data that they collect and they outfit their vehicles with sensors that cost 10’s of thousands of dollars to install. Tesla has installed their hardware for a few hundred dollars, connected it to a computer that constantly updates and Tesla is being paid to collect data. Yes, you read that correct. Drivers pay Tesla for the purchase of the car that collects data. Additionally, FSD subscribers are paying to both use the service and send more data back to Tesla for software improvement. It’s the ultimate flywheel. Tesla will deploy FSD when they feel that it is 10 times, 20 times or even 50 times safer than a human driver and they have the data to back up the claim. Most people have no idea how close this is to becoming reality.
ELON - No list of reasons to invest in Tesla would be complete without acknowledging the special talent that Elon brings to the table. You can love him or you can hate him, but you cannot deny that he has a knack for solving big problems, and this world has some really big problems.
There are plenty of other reasons to invest in Tesla, but these are 5 that resonate with me today and will probably generate some conversation regarding the company, Tesla stock or Elon Musk.
VOLATILITY - The biggest reason not to hold this stock is its volatility. It frequently has price fluctuations of 20 - 40% and occasionally is prone to a swing of 50% or more. For many people, watching 50% of a stock’s worth evaporate in a matter of weeks is too much to handle. For this reason, if you are not prepared for a very wild ride, you may want to seek something more stable like Apple or Microsoft. Tesla stock is very rewarding for those who have a buy & hold mentality, but it is definitely not for the faint of heart investor.
If you are reading this, you probably have some feelings on the topic. They could even be very strong feelings in support of, or in opposition to mine. Either way, I would love to know your thoughts in the comments section of this blog.
