The right comp for Tesla stock is bitcoin
That’s one of the key takeaways from Barclays analyst Dan Levy’s attempt to make sense of Tesla’s vertiginous tumble over the last few days.
The stock — which, to be fair, is up slightly in early trading — has been pummeled in recent days as the air has come out of the postelection Trump trade that sent shares of companies with financial or ideological linkages to President Trump soaring.
Levy argues that the rally, which pushed Tesla up by more than 90% in the weeks after the November election, was never about any kind of fundamentals. In fact, Tesla, which is valued at a multiple of 145x its expected 2025 earnings, doesn’t really trade like a stock. It trades like bitcoin. He wrote:
“Bitcoin is the right comp: Tesla stock reflects many of the same ‘animal spirit’ factors that tend to drive Bitcoin (up ~50% post-election to mid-Dec vs. Tesla up ~90%) and other cryptocurrencies. This includes belief in future value that is underpinned by the potential for large-scale disruption (not just in Autos, but many of Tesla's ‘other bets’ such as robotics and AI), scarcity (the only public Elon Musk company), and to some extent Greater Fool Theory (the popularity of Tesla makes a strong case that the next generation of investors will be buying the stock for years to come).”
In other words, Tesla’s postelection rally was a speculative spurt of retail trading rather than a sound bet on the prospects of Tesla’s businesses. And, as Elon Musk deepens his immersion in right-wing politics and becomes increasingly associated with the Trump adminstration, those prospects actually seem to be looking worse and worse.
“Bitcoin is the right comp: Tesla stock reflects many of the same ‘animal spirit’ factors that tend to drive Bitcoin (up ~50% post-election to mid-Dec vs. Tesla up ~90%) and other cryptocurrencies. This includes belief in future value that is underpinned by the potential for large-scale disruption (not just in Autos, but many of Tesla's ‘other bets’ such as robotics and AI), scarcity (the only public Elon Musk company), and to some extent Greater Fool Theory (the popularity of Tesla makes a strong case that the next generation of investors will be buying the stock for years to come).”
In other words, Tesla’s postelection rally was a speculative spurt of retail trading rather than a sound bet on the prospects of Tesla’s businesses. And, as Elon Musk deepens his immersion in right-wing politics and becomes increasingly associated with the Trump adminstration, those prospects actually seem to be looking worse and worse.
