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Amazon Vs. Tesla

May 07, 2018 9:03 PM ETAmazon.com, Inc. (AMZN), TSLA149 Comments
David Pinsen profile picture
David Pinsen


  • Over the weekend, I ran a simple test of options market sentiment on Amazon and Tesla: Amazon passed and Tesla failed.
  • Coincidentally, the Financial Times contrasted both companies in its lead editorial over the weekend.
  • I describe how the results of options test are consistent with the analysis in the FT's editorial.

Jeff Bezos

Amazon CEO Jeff Bezos (Credit: Drew Angerer/Getty)

Amazon Versus Tesla

On Saturday, I shared the results of a simple test of options market sentiment on Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) on Twitter: whether each could be hedged against a single-digit decline over the next several months using optimal, or least expensive, put options. Amazon passed and Tesla didn't. Then, I read the Financial Times, as I usually do on weekends, and saw that their lead editorial - "Musk, Bezos and the art of selling jam tomorrow (paywalled here) - also contrasted Amazon and Tesla. The connection between the two comparisons is instructive, as I elaborate below. Let's start with the FT's comparison.

The Art Of Selling Jam Tomorrow

The gist of the FT's editorial, which opens with a reprise of one of Benjamin Graham's most famous quotes, is that growth companies rely on investors' sights being set on the future, but at some point the future comes around and the money has to be there:

In the short run, the investor Ben Graham said, the stock market is a voting machine; in the long run it is a weighing machine. And what the market weighs in the long run is money. It is true that share prices are forward-facing, reflecting anticipated future cash flows. For most companies, though, if the future consistently fails to arrive, the game is up.

This will be on the minds of investors in electric-car company Tesla, and perhaps that of its founder and chief executive Elon Musk.

If you're tempted to type, "Actually, Martin Eberhard and Marc Tarpenning founded Tesla" at this point, recall that Musk is now legally considered a co-founder along with them. Back to the FT, where the editors address Musk's infamous characterization of an analyst's question as "boring bonehead":

For investors, questions

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This article was written by

David Pinsen profile picture
I developed the hedged portfolio method of investing at Portfolio Armor, and I run a Marketplace service at Seeking Alpha based on it called Bulletproof Investing.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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