March 01, 2023

Are Tesla investors focused on short term or long term results?

My mom used to teach second grade. Now, a grandmother, she's proud to have a granddaughter "graduating" second grade. She says the most important thing second graders should learn is delayed gratification. In short, kids need to learn patience. It got me thinking — in today's culture everyone needs to learn delayed gratification.

Source: EVANNEX; Photo by Casey Murphy

Want the answer? Use Google. Want to go somewhere? Use Uber. Want a product? Use Amazon. Want a movie? Use Netflix. Gone are the days of encyclopedias, taxis, physical stores, and movies theaters. Are we becoming a culture of obnoxious, impatient, entitled trolls demanding immediate gratification — I WANT IT NOW!

No.

Remember: good things take time. Fast food doesn't taste like fine dining. Sure, you might wait for the food, but it's going to be much more satisfying.

A character trait like delayed gratification can be valuable. It gives you an edge — especially in today's gotta-have-it, fleeting, FOMO culture.

This also holds true with investing. Ask Warren Buffett. He's done okay. Nevertheless, Wall Street's media outlets, analysts, and (yes) investors remain obsessed with the day-to-day gyrations in the stock market. Long-term thinking? The farthest out most investors can envision is a company's upcoming quarterly results.

Alright. I purposely drew out this introduction to test your patience. Thanks for staying with me. Now, let's talk Tesla. The stock is volatile. Massive movements (in either direction) never surprise me. I tell friends: investing in Tesla is like riding a rollercoaster. Expect lots of ups-and-downs. If you're a short-term thinker, this stock is probably not for you.

On the other hand, according to a recent article in Forbes, if you're a long-term investor, Tesla might make some sense. Trefis Team writes, "Tesla and its investors are NOT focused on 2020 or 2021." Instead, emphasizing the bigger picture, Tesla's Elon Musk "has been able to focus the world much further out. It’s good. No, it’s phenomenal - we all need to look beyond our noses."

"The message is simple. Gosh, how selfish can you be - look way far out into 2050 and imagine the planet you’ll leave for your children. Fossil fuel is bad, big oil is terrible, and you don’t want your children to die of climate change. How dare you (think Greta Thunberg) look and plan for the next quarter, or even the next couple of years. How short-sighted. Look at global warming and plan for the next century," writes Trefis Team.

Okay. But isn't there risk thinking long-term? Sure, but, "[all] risk is in the eyes of the beholder; real risk is climate change. Real risk is the short-sightedness of focus on the next quarter, while our children face the floods, hurricanes, and other climate calamities of the long term... [via] big oil, and oil guzzling car producers of today."

Look, the writing is on the wall. Electric cars are the future. And Tesla is just starting to gain some real traction (and a few quarters of profitability under its belt). "If this message makes sense to you, you’ll see Tesla’s one metric that matters: it’s Tesla’s time horizon of focus. Many investors see this - without realizing perhaps, and as such, Tesla’s massive value still looks small to them."