Tesla ($TSLA) | Idealism of the Future

The market is missing the real Tesla story. This isn't about EVs anymore—it's an AI and autonomy powerhouse that Wall Street still hasn’t fully priced in. With FSD scaling and robotics on the horizon, we might be staring at the early innings of a $10T company. Are you seeing the full picture?

January 20, 2025
Micheal Porter

Electric vehicles (EVs) are the last thing we consider when we think of Tesla. Frontrunner of perhaps the greatest meme stock of all time, our conviction in our thesis is grounded in calculated risk and a holistic vision of this company's potential.

Our thesis is dependent on Elon leading the company. Quench and Shay have called Musk a leading visionary of our time who continuously pushes the boundaries of innovation and sustainability. He gets stuff done. Detached from any personal opinions on this loudly unconventional and disruptive character, Tesla, functions as a transformative force in the automotive and energy sectors. Tesla is a pioneering tech company, with a mission to accelerate the world’s transition to sustainable energy.

Regardless of how you feel, Musk has consistently proven to be a dominating force against adversity transcending competition entirely. Tesla is not an EV stock. It is idealism for the future.

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Tesla’s Products and Services

Tesla’s reach spans far beyond EVs, offering an ecosystem of innovation across multiple industries:

Full Self-Driving (FSD) and Autonomy

Tesla’s FSD technology is a game-changer with the potential for partnerships with Uber, Buick, and other global players. With a rumored $1 billion run rate already, FSD is nearing commercial scalability.

Electric Vehicles

Known for superior battery range, Tesla’s EVs offer over-the-air updates and remote monitoring, keeping them ahead of competitors.

Energy Storage

From solar panels and the Powerwall to the Megapack, Tesla is pioneering energy storage solutions that complement its mission to transition the world to sustainable energy.

Future Innovations

  • Robotaxi: A paradigm shift in transportation, offering high margins with minimal CapEx.
  • Optimus Robot: The next frontier in robotics.

Tesla’s Moat

Tesla’s competitive advantages are deeply entrenched in its vertical integration, innovation, and brand loyalty:

  • Vertical Integration:
    Tesla designs and manufactures key components in-house, improving quality control and reducing reliance on third-party suppliers.
  • First-Mover Advantage:
    Tesla leads in the EV market, with a 14% performance delta over competitors, setting the standard for autonomy and energy solutions.
  • Institutional Backing:
    Institutional money flows into Tesla during pivotal moments, driving substantial price movements.
  • Scalable Innovations:
    Tesla’s FSD, energy products, and robotics initiatives are paving the way for new revenue streams that dwarf traditional EV margins.

The Risks

No investment is without risks, and Tesla is no exception:

  1. Valuation Concerns:
    Tesla’s stock trades at extremely high multiples, requiring consistent execution to justify its price.
  2. Regulatory Scrutiny:
    Tesla operates in highly regulated sectors like automotive and energy, facing potential fines, recalls, or restrictions.
  3. Geopolitical Exposure:
    Heavy reliance on international markets, especially China, introduces risks from trade tensions and regulatory shifts.
  4. Battery Supply and Innovation:
    Any setbacks in battery technology or supply chain disruptions could hinder scalability.
  5. Elon Musk:
    A visionary leader but polarizing figure, Musk’s public statements and unconventional behavior often add volatility to Tesla’s stock.

The Trade

Tesla’s stock offers opportunities for both long-term investors and short-term traders.

  • Entries: $140, $160, $180
  • Secondary Entries: $204
  • Short-term Targets: $266, $300
  • Long-term Targets: $384, $400, $450, $700+

The Story

Tesla’s price action reflects its status as a "story stock," driven by narrative with an added "Elon premium." The story only holds value with Elon at the helm. This is what made the Elon pay package vote a key catalyst over our critical pivot $204.

Quench and Shay have methodically scaled into Tesla from $140 to $180, capitalizing on fire-sale discounts during pullbacks. The stock’s behavior is a trader’s dream, offering high volatility in well-defined ranges. It’s a story of patience and precision—waiting for key levels to confirm before entering positions. Tesla rarely retests support on positive news, making discipline and planning essential for success.

The Trump Trade

Tesla is a key player in the Trump Trade narrative, driven by its alignment with the administration's pro-business, America-first policies. For Shay and Quench, Tesla has never been an EV company. The narrative if Elon bringing future innovations, especially FSD/autonym and robotics, has been at the core. Trump’s emphasis on technological innovation, AI leadership, and domestic energy production bolsters Tesla’s positioning in autonomy, energy storage, and sustainable infrastructure. Tesla's unique blend of disruptive innovation and profitability makes it a standout in an environment that rewards U.S.-based technological dominance and market leadership. Now with Elon at the head of the new Department of Government Efficiency, he will have a much greater level of influence within Trump's policies.

The Verdict

Tesla is more than an investment—it’s a bet on the future. With a strong pipeline of innovations, robust institutional backing, and a visionary at the helm, Tesla is positioned to redefine multiple industries.

For Quench and Shay, Tesla is a cornerstone in their long-term portfolios, but also a tactical play for range-bound trading. Whatever the strategy, one thing is certain: Tesla’s journey will be volatile, unpredictable, and potentially transformative. Buckle up—it’s going to be a wild ride.

Tesla is not just a stock, but a vision for the future.

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