The Real Reason Tesla Stock Keeps Going Up Has Nothing to Do with Cars

Keith Fitz-Gerald May 03, 2017

Tesla stock hit another new record high Monday… up a staggering 1,200% since the company went public in 2010.

Still, the bears can’t give up – not the least of whom is legendary hedge fund manager, David Einhorn, who roars that the stuck is in a bubble and on the verge of crashing.

I can’t blame him. I’d be bearish, too, if I were the “Mayor of Shortsville” and talking my own book… and if I thought Tesla was a car company.

Tesla’s got a secret.

Tesla Should Fail… But Here’s Why It Won’t

Every conventional metric in the book says Tesla Inc. (NasdaqGS:TSLA) is a bust. EPS is negative, the beta is high and there’s a sea of red in the numbers.

Compared to other car manufacturers, production is basically non-existent – if that’s what you call the 76,230 vehicles the company sold in 2016 – when compared to the 17 million sold in each of the last two years in the United States.

By comparison, General Motors (NYSE:GM) sold more than 3 million vehicles, while Ford (NYSE:F) sold more than 2.5 million.

Adding fuel to the proverbial fire, most industry experts have major doubts about Tesla’s ability to compete against major names like Honda, Nissan, Volkswagen, and Audi when those companies finally field electric cars.

First-mover advantage only lasts so long, they reason. Besides, goes the alluring argument, Tesla’s operating loss was $15,000 per vehicle until very recently. Then there’s the fact that the company’s also hemorrhaging cash to the tune of $5 billion per year.

Many of those same “experts” are worried about Elon Musk’s ability to manage the company. Among other things, he’s tied up in the space race, artificial intelligence, the Hyperloop, and the “toxic” acquisition of Solar City.

When, in fact, that’s the whole point.

Tesla is not just a car company.

Tesla Is a Utility Killer

The fact that Musk is involved in so many things is precisely the attraction here and why savvy investors would be wise to pay attention.

Musk wants to redefine the electric grid and, with it, the world’s energy supply.

Not 1 in 100,000 investors understands this which is why so many have been left behind already – and why so many more will be if they don’t get on board.

Tesla cars are nothing more than a ticket to entry in Musk’s mind.

The real prize is controlling electricity from “soup to nuts” to borrow an old expression.

Premium subscribers to our sister publication, the Money Map Report have had the early (and urgent) opportunity to tap into the expected energy spending boom under President Trump’s administration. But this profit play was just one of ten that I delivered to those subscribers – a select group of “26(f) programs” that you can still “enroll” in today.

These programs gave American retirees the chance to add up to $68,670 to their portfolios last year. Click here to learn more – and be sure to pay attention to the energy sector play that’s positioned to surge as Elon Musk overhauls the entire power grid…

Let’s start with the Gigafactory.

Industry analysts have long maintained they’re just for lithium-ion battery production and just for Tesla’s own use. In reality, each Gigafactory may be able to supply power for 500,000+ vehicles a year.

Clearly Musk is thinking beyond his own cars.

In fact, he recently hinted that just 100 Gigafactories would have the capacity to meet the demand for lithium technology sufficient to power the world. New York is banging on his door to build one, as are Chinese leaders who are reportedly eager to start construction.

Just last Friday, Elon Musk spoke at the 2017 TED Conference where he teased Tesla’s forthcoming electric semi-truck and hinted that the company will likely announce four new global Gigafactories later this year.

Then, there’s Tesla’s Powerwall.

Released in 2015, the Powerwall uses – ta da – lithium-ion technology to make storing home energy more affordable, powerful, easier and safer than traditional deep-cycle batteries. We’re looking into one for our own home and at $3,500 a pop, I like what I see because the thing can be used to story energy and then feed it back into the house during power outages or when I don’t need to draw much from the local utility.

And, Tesla’s Solar Roof.

The company already has four designs based on current roof styles and plans on releasing two of those this summer. Projected installation costs are less than the cost of a regular roof… and that’s before energy production.

Never mind Einhorn’s view nor conventional metrics. The real equation when it comes to Tesla looks like this…

Like I said… from soup to nuts.

The way I see things, you’ve got two options.

OPTION #1: You can ignore everything we’ve just talked about today and continue doing what most investors have been doing, which is either nothing at all or waiting in disbelief for a pullback that may never happen.

OPTION #2: Take action and do something to build Total Wealth now, while you still have the chance.

Admittedly, Tesla stock isn’t cheap… but don’t let that stop you.

We’ve talked many times about Total Wealth Tactics you can use to your advantage in situations like this.

  1. Dollar cost average into the stock by buying a little each month and eventually building up a sizable position. Doing so harnesses the natural ebb and flow of prices so that over time you’ll wind up with higher profits as the company matures and more investors pile in as the price goes up.
  2. Buy “deep in the money” LEAP options that give you a strategic alternative to owning the stock at a fraction of the cost yet still allow you to participate in the appreciation ahead.
  3. Use a Lowball Order or sell put options to capture a pullback if and when it happens as a means of capturing volatility others fear.

Oh, and by the way, there’s one last thing that nobody but me seems to have realized yet when it comes to Tesla: it’s a utility killer.

Imagine what happens to all those juicy utility dividends that so many income-starved investors depend on when Team Tesla renders conventional power plants obsolete.

They’ll vanish just like your electric bill.

I’ll be following the story closely as it develops and, when the time is right, you’ll have a list of the most at-risk utility companies for you to capitalize on.

Until next time,


PS: Moments after I filed this story news broke on Reuters that “Traders short selling Tesla’s (TSLA.O) soaring stock have lost $3.7 billion this year, eclipsing the combined losses of traders shorting Apple (AAPL.O), (AMZN.O) and Netflix (NFLX.O).”

15 Responses to The Real Reason Tesla Stock Keeps Going Up Has Nothing to Do with Cars

  1. THay says:

    Perhaps Tesla is a case of investing in “The Bigger Fool” Principle.
    You buy hoping that tomorrow there will be a bigger fool who will pay more.

    • Keith says:

      Hello T.

      I wonder about that too but, then again, 1,200% is hard to argue with….if you have the appropriate risk management in place using Total Wealth tools like the “free trade,” trailing stops and position sizing to protect your profits and your capital “just in case.”

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  2. Joseph Maxwell says:

    With OBL, we will be able to have abundant energy where everyone can be generating their own inexpensive electricity without the grid. Good bye electric cars, expensive batteries and solar cells. Technology has moved too fast in both the solar cell and battery development and caused existing components to be obsolete and worth less in a short period of time. Solarcity is a good example. The GigaFactory will be another example unless Musk is able to modify his factory over and over again and not get swamped with out of date inventory.

    I personally have a transportation system that we are developing, in stealth, that will be a major disruptor for what Musk is proposing and we are not losing billions of dollars.

    Joe Maxwell

    • Keith says:

      Hello Joseph.

      You raise some very important points that are well taken. As for your system, I’m intrigued and look forward to seeing what you have under wraps when the time comes!

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  3. Andy says:

    Still drinking the kool aid I see.
    The gigafactory is run by Panasonic and they are the ones that will profit IF they manage to produce any savings in battery costs. Further factories will not happen once this is realized.
    Electric semi-don’t you think he should solve just getting the M3 to market before jumping into this? This is a completely different ball game.
    Powerwall 1 disappeared without a trace and Powerwall 2 will probably do so too. They are just not practical or cost effective for most households.
    Solar tiles (which were supposed to be released for ordering this month) have been tried by several very good companies and have been a bust. What makes you think a failed business like Solarcity can pull this off when they have not been able to compete in solar panels which is a cut throat and zero margin business.
    If you continue to believe Elon Musks tweets and his horribly fragmented array of projects in his head which will never come to fruition, then you may well be one of the ones staring in disbelief as this house of cards comes crashing down. Any company that survives on issuing debt and stock without making profit or even positive FCF is doomed to ultimate failure. it being ‘different this time’ does not cut it. This is a story stock and will have a nasty and dramatic ending.

    • Keith says:

      Hello Andy.

      My job is to identify the world’s most profitable opportunities and to bring them to your attention together with the tips and tactics needed to follow along.

      In that regard, Tesla has been a fabulous “ride” – pun absolutely intended. Since the stock debuted, it’s returned 1,201.88% which is enough to turn every $10,000 into $130,188.36.

      I sure hope you’re following along but, sadly, can only infer from the nature of your email that you’re not. And that raises an important point.

      Most investors get tripped up because they let their emotions override investment decisions – something we’ve talked about a lot during our time together. Being “right or wrong” is irrelevant if you know how to the read the situation and trade it profitably.

      Just for the sake of conversation, though, let’s play along with your line of thinking and suppose Musk has his head screwed on backwards and that Tesla will fail for reasons you identify. In that case, you simply adjust your tactics to play the downside or head to the sidelines to protect your profits.

      I know we will because that’s exactly what I’ll be advising members of the Total Wealth Family to do when the time comes…if it comes.

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  4. G Coleman says:

    I need a trustworthy stock broker with whom I can make these stock purchases . Any advice for so cal investor?
    Thank you
    GQ Coleman

    • Keith says:

      Hello G. and thanks for asking.

      Unfortunately, I cannot recommend specific brokers because I am unfamiliar with your specific situation, risk tolerance and investment objectives. But what I can do is encourage you to ask the following questions as a means of determining which one offers what you need.

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  5. Reda Belarbia says:

    No risk no fun
    The numbers are red as the company is competing with well established businesses and revolutionizing & disturbing many industries .
    All is noble and inline with millions of people that will make our future a better world.
    The “better world ” company in israel crashed as all was based on technology that was obsolete and without product/eco system bandwidth.

    This is not the case of Tesla that will continue to lose money to support the sunk investments required by the various mega projects of its companies.
    However, this will be successful and there are possibilities to leverage the investments in many fields.
    Just imagine one decision : Apple to equip its electric cars with Tesla batteries; what would be the impact on the industry and on tesla stock and future ?

    • Keith says:

      Hello Reda.

      Well put. The Apple / Tesla connection would clearly re-write the industry and, chances are, investors would laugh all the way to the proverbial bank.

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  6. Kenneth H Farmer says:

    Where is the list of 26f companies promised to me on my subscribers/follower package?

    • Jessica Sheppard says:

      Hi, Kenneth!

      Thanks for reaching out, and we’re thrilled to hear you decided to take your investing future up a notch with Keith’s premium service! As for the list of your 26(f) programs, just click here to access the updated report. If you’d prefer to take a look at the original briefing, click here!

      Keep in mind, this is only available to premium subscribers, so you’ll need to have your Money Map Report username and password ready.

      As always, our member services team is also available if you have any further questions. They can be reached toll-free at: 1-888-384-8339

      Thanks for being a part of the Total Wealth Family!

      Jessica Sheppard
      Associate Editor

  7. Bill Rogers says:

    I bought 2 contracts of “P” and sold it at a $50 loss even though it had doubled on the price sheet. I know it is not only me that has found out the hard way this happens. The question is “how can we as investors can keep this from happening”?

  8. jim says:

    Tesla is a house of cards. It can go years but the physics is it will fall.

  9. TN flash says:

    You are correct in your statement about Elon Musk. Elon Musk has always been up front about the direction of his company. Many think he is interested in beating the other car manufacturers; Toyota, Honda, GM, Hyundai, Kia, Nissan and Ford. He said his target is big oil companies like Exxon. Which means no more sending troops to the middle east, the Arctic Circle or anywhere else in the world to defend our supply of oil, no more burning carbon fuels that pollute the air. Clean electricity for everyone. Remember he GAVE his company electric car patents away to anyone that can use them. He is busy installing fast charge stations from coast to coast while increasing production and reducing the price of his cars even while his engineers are increasing their range. His power wall added to his solar panel shingles are the game changer. Just think, his solar roof shingles, that are already now equivalent in cost to conventional top end roofing materials, will get cheaper as they gear up for mass production. The the cost of owning a solar home that powers the family electric car will soon be within everyone’s price range. If we are lucky enough to be one of the owners of a home with a power wall large enough to store power for days and a roof covered with enough affordable solar panel shingles to energize the home and the family car, why will we need the grid or gas companies? Electric utility companies, and petro stations will eventually go the way of the horse and buggy.

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