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

Keith Fitz-Gerald

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. (Nasdaq: TSLA) is a bust. Earnings per share are negative, the beta is high, and there's a sea of red in the numbers.

Compared to other car manufacturers, production is basically nonexistent – 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 Co. (NYSE: GM) sold more than 3 million vehicles, while Ford Motor Co. (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 one 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.

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Keith Fitz-Gerald

About the Author

Browse Keith's articles | View Keith's research services

Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.

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