Tesla, as a Company, is Going to Succeed:
When it comes to investing, its always important to buy with your head and not your heart. Develop your system, and invest accordingly. If you want to change your investments, refer back to your system and decide whether or not your system needs to be adjusted, updated or overhauled.
Always refer to your system before making investment decisions. Your system is your brain. You spent a lot of time developing it, so stick to it. When markets go up and when markets go down, stick to it.
As you should be aware of by now, my system involves cash flow. Not just cash flow, but continually growing my cash flow every month, so that next month I make more passive income than I did this month, every month, forever. This is my system. Even if it means buying just one more dividend paying stock this month, I am sticking to that system.
Liking a Product VS. Liking a Company
There are times where a new product may come along that you think is just fantastic. Maybe the GoPro was one of these products? Very cool product indeed, and also developed a cult following with raving fans which is very tough to do.
Its ok to buy products you like. But that doesn’t mean you should buy their company’s stock. Especially if it doesn’t follow your system. GoPro makes a great product, but if it wants to be a successful company and make money on your investment, it must overcome A LOT of hurdles.
We want to make investments into companies with as few ‘ifs’ as possible. GoPro going from successful product to a successful company has a lot ‘ifs’ in front of it, and many of those ‘ifs’ are competitors that are much larger than them already.
What Does This Have To Do With Tesla?
Tesla is a car company. A new car company. A new car company in an age where the industry doesn’t allow for new car companies.
There are many ‘ifs’ in front of Tesla for it to succeed as a company.
But heres the catch, I really believe its going to succeed.
Elon Musk, CEO and Founder of Tesla just announced their latest product. A batter for the home. Tesla may not be a car company after all. It may be a battery company. It may be a batter company in an industry that definitely needs more efficient batteries.
What Really Makes Tesla Special?
Elon Musk is out to change the world. This is a very good thing, and your heart will most likely support this. But your brain should tell you that most people are lazy and change is hard. Investing in change can be expensive.
You can like the idea of renewable energy for the earth, but for your investment portfolio it has to make both sense and cents.
So what is it that makes Tesla so special? From day one, Elon Musk has marketed his products as a luxury product, and when you make a luxury product, you can make your own margins. This is not a statement meant to be cynical, its meant to point out Elon Musk’s true genius!
When you create a product for the masses, you must mass produce it as cheaply as possible and cut all possible corners. This sacrifices product integrity, and eventually brand integrity.
Tesla makes a $100,000 car. This gives it plenty of room for error when it comes to profit margins. It also allows for investment and innovation. A $100,000 car model today may be a $30,000 car model ten years from now. And there will be a new $100,000 car model ten years from now that will consist of parts and innovations not even considered today.
Now Tesla makes a $3500 home battery back. This isn’t something you need. Its something you want. People love buying things they want more than things they need.
There is a lot of potential for a home battery. In fact, the next natural disaster that strikes I bet you will see Tesla delivering charged batteries to the stricken areas that will greatly demonstrate their potential and importance. Mark my words.
Unfortunately, I don’t hold the same views that many have that this will completely change the world. As a storage of power, I assume these are officially the best batteries on the market. But energy demand will not slow down, and the cost and demand for the raw materials needed for solar power are just not inline.
Additionally, the problem with humanity is that the more efficient things get, the more we use, the more we ‘need’.
The more fuel efficient our cars become, the more we drive.
The more battery our iPhones have the more apps we download and photos we take.
The more energy efficient our homes become, the more energy we consume. Smart thermostats? Smart refrigerators? Smart TVs?
The Future for Tesla
So what does the future hold for Tesla? No one knows for sure. If someone says they do, they are lying. But its hard to argue that the future doesn’t seem bright. First, they updated an outdated industry and forced change and reform. Then, they improved on an old product and created an entirely new marketplace that just days ago didn’t even exist.
Does this sound like another company to you?
As of today, Tesla does not pay a dividend. It is a growth stock and growth stocks rarely pay dividends. I currently do not own any Tesla stock… but I would be lying if I said I wasn’t reviewing my investing system later today.
What did you think? Like this? Hate this? Let me know!