TSLA - Tesla Bulls Are Like Knicks Fans: Still A Sell For Long-Term Investors

2024-05-13 10:21:51 ET

Summary

• Tesla, Inc.'s shareholders are emotionally invested in the company.
• Tesla's stock is widely followed on Social Media, and it is highly volatile. This is the classic definition of a Meme Stock.
• Tesla's shareholders overestimate the probability that various growth initiatives will succeed, and the potential payoff of these initiatives.
• Tesla is no longer a growth stock. In China especially, it is struggling and this portion of its business should trade at a lower P/E Ratio than the rest of the company does. As a result, Tesla's overall P/E Ratio is even more inflated than it first appears to be.
• Traders and speculators can trade the swings, but long-term investors should sell TSLA.

I remember a quotation made by a hedge fund professional soon after his retirement. " For the first time in decades, I woke up without wondering what Apple had done overnight. " This came to mind recently because I now realize that I have been living under a rock for most of the last decade. I really haven't given much thought to Tesla, Inc. ( TSLA ) stock as an investment because it didn't fit the investment criteria that have been imposed upon me. But, a trillion-dollar company that turns into the S&P 500's (SP500) worst performer? Historical parallels with Detroit in the 1970s when a wave of new entrants from Asia knocked General Motors ( GM) , Ford ( F ), and Chrysler (STLA) from their perch? A charismatic but controversial founder? Maybe there's an interesting story here, I thought.

So, I did some research and wrote this article, Tesla Is No Longer A Growth Stock... , fresh eyes and all the rest. It was like I kicked over a nest of hornets - soooo much time playing Whack A Mole. A point unrelated to the main thesis would be brought up in the comments section, I would respond with facts and logic, the issue would be sidelined for another unrelated issue, which would be dealt with, and then eventually, the original issue would be raised again, even though it had nothing to do with whether Tesla is still a growth stock....

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