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Tesla: Ready To Re-Enter The Fast Lane

Dec. 03, 2019 8:00 AM ETTesla, Inc. (TSLA)MBGAF, NEE, POAHY, SPY, TAN, XLE239 Comments
DoctoRx profile picture


  • TSLA has been churning for 2 1/2 years above and below its $330 current price, but technicals and fundamentals suggest it's poised to rejoin and lead the renewed bull market.
  • TSLA surged during QE 3, and now the Fed is encouraging risk-on speculation. TSLA is a major beneficiary of extra liquidity, and has re-entered an uptrend.
  • Global public opinion is continuing to swing toward TSLA's vision of our energy future, which opens up huge growth potential for its products.
  • Operationally, it has gotten its act together much more than 1-2 years ago, while EV competitors falter.
  • TSLA's growth potential is so large that during this "not-QE" policy of Fed money printing, new highs in the stock price can still leave the stock with lots of upside potential.


I've moved from neutral on Tesla (NASDAQ:TSLA) at $317 two years ago, in Thinking Differently About Tesla, to long-term bullish at $300 in October 2018 (but cautious due to Fed tightening), in Yesla! Now I'm looking for the stock to perform bullishly, rejoining the S&P 500 (SPY) at new highs.

The reasons are both fundamental and technical. Beginning with the latter...

The Fed's last risk-on period coincided with almost all of TSLA's alpha

Here's TSLA's stock chart since it has been a public company, showing the surge during QE 3, notably during the acceleration phase when QE 3 was young, in late 2012 and 2013.

The Fed is back in QE mode, though the Fed says it will not push excess reserves especially high this time. Whether this "not-QE" or QE-lite will be brief as in QE 2 or lengthy as in QE 3 is to be determined by the Fed's assessment of the economy over time.

On Oct. 1, 2012, when QE 3 began, TSLA was around $30 and had gone nowhere for two years. It then went up more than 6X to August 2013. Of course, I'm not projecting such a move this time, but I think there's enough monetary juice that will flow long enough to allow TSLA to move well into all-time high territory within one year.

I'm only giving this analogy because:

The stock chart is now constructive on all major time points

The recent momentum thrust on Q3 earnings and the resumption of "not-QE" is a technical positive. The big picture chart is now pointing up again. This price surge has turned the 50, 150 and 200-day/week/month EMAs all positive or turning positive again.

TSLA stock is therefore reasonably "in gear" but attractive in that it's at a price it first reached

This article was written by

DoctoRx profile picture
Over 40 years of investing in individual stocks. Retired physician (cardiologist). Also retired from various roles in the US pharmaceutical industry. Main focus is on growth stocks, mostly biotech and tech, but with fundamental value considerations. Secondary focus on macro trends driving asset allocation.

Analyst’s Disclosure: I am/we are long TSLA, NEE, SPY. 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.

Not investment advice. I am not an investment adviser.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (239)

Excellent analysis, thoughts, views and writing and very interesting reading. It sounds like he might be a Republican: I am not, but I totally believe I understand both parties' issues exhibited here.
DoctoRx profile picture
Look2truth: did you mean to make this comment in response to my TSLA article?
A Tesla on autopilot rear-ended a Connecticut trooper’s vehicle early Saturday as the driver was checking on his dog in the back seat, state police said. The Tesla is ready to enter the fast lane. It even calls the police if there has been an accident.
Sunil Shah profile picture
@Lewis Bagwell
In FSD 6.0 the dog reports to the Police via a trunk call...
DoctoRx profile picture
Lewis, this is a cut-and-paste from TSLA's web site: www.tesla.com/...

"Current Autopilot features require active driver supervision and do not make the vehicle autonomous."

What part of "active driver supervision" did the dog-checking driver not remember?
Sunil Shah profile picture
Somethings rumbling...
Can you feel the landslide coming...

'Pedo guy' might be the combustion of the delusion
Now which CEO would exacerbate his idiocy:
Musk On Trial, Day 1: "He Didn't Literally Mean To Sodomize Me With A Submarine"

Muskrat you are about to be brought back to planet Earth
If I were a conspiracy theorist, I would say the crescendo of arrogant, unprofessional Muskrat conduct of recent creates the IDEAL OPPORTUNITY TO HUMBLE THE EGOMANIAC...
By shorting his submarine and his shares AGGRESSIVELY right NOW, where/when it really hurts.
'Musk Tells Jury He’s Worth $20 Billion, But Is Short on Cash'
He’s pledged about 40% of his Tesla shares to unlock some of the wealth without shrinking his stake. A May filing revealed that he had access to about $500 million of credit lines from affiliates of Morgan Stanley, Goldman Sachs and Bank of America as of April 30. Still, that’s a fraction of his $26.6 billion overall fortune on the Bloomberg Billionaires Index and it’s unclear how much of those credit lines remain unused.

the links above are from "unreliable ZeroH..
Are there errors.
BTW I know a lot of Muskrat's past in South Africa, I live here
And theres a lot more to explain his persona, but I will wait for the US market to glean.
"A May filing revealed that he had access to about $500 million of credit lines from affiliates of Morgan Stanley, Goldman Sachs and Bank of America"
And these guys are ALSO market makers in the stock.
DoctoRx profile picture
Defamation suit goes Musk's way.
The 'Fast Lane' is beginning to get real crowded. TSLA better bring its A-game b/c VW, Audi, MB, Volvo individually and collectively are setting their sights on Tesla. That's not a threat, it's a statement of fact.

2020 is going to be a "Come to *****" episode, Imo. And, I don't believe that Tesla has an A-game sufficient enough to effectively compete with these EV manufacturers over the relatively long run.

Stay tuned.....
You don't compete when you have the lead. You just keep doing what works. Until any other ICE maker produces a realistic competitor to the Model X, everything you just said is fake news. People don't want EV's they want Tesla's. The new "mustang" looks just like the Mercedes EQC.
"You don't compete when you have the lead"
The "lead" on what, precisely?
Battery powered s--t boxes?
Most folks grew out of playing with toys like that in elementary school.
kazetg3 profile picture
@Sinik My Model 3:
- 60% less fuel cost vs. my old ICE
- No maintenance needed so far (1.5 years)
- 270 Wh/mi (250 Wh/mi SR+ leads industry)
- 10% more powerful than when I took delivery (5% power increase ^2)
- Built-in Dashcam/Sentry Mode (making vandals pay)
- Connects directly to Spotify, Netflix, Youtube, etc.
- Free games
And on.
And on.

If this is a "s--t box", man I dunno what kids nowadays would think of whatever car you drive. Best not ask. All they talk about is Tesla. Who the heck is "most folks"?
Sunil Shah profile picture
Muskrat you are about to be brought back to planet Earth

If I were a conspiracy theorist, I would say the crescendo of arrogant, unprofessional Muskrat conduct of recent creates the IDEAL OPPORTUNITY TO HUMBLE THE EGOMANIAC...

By shorting his submarine and his shares AGGRESSIVELY right NOW, where/when it really hurts.
'Musk Tells Jury He’s Worth $20 Billion, But Is Short on Cash'
He’s pledged about 40% of his Tesla shares to unlock some of the wealth without shrinking his stake. A May filing revealed that he had access to about $500 million of credit lines from affiliates of Morgan Stanley, Goldman Sachs and Bank of America as of April 30. Still, that’s a fraction of his $26.6 billion overall fortune on the Bloomberg Billionaires Index and it’s unclear how much of those credit lines remain unused.
Money Talks! profile picture
How some would like to see Elon Musk fail! Prove them wrong, Mr Musk!
@Money Talks!
It's nothing personal against Musk, but I don't care to see liars, frauds and bullies succeed.
Money Talks! profile picture
The fossil fuel people you are referring to?
Hi, Doc;
Let me say at the outset that I hope TSLA finds its way to sustained profitability and success. It's an innovative, disruptive company.

That said, I get a little hinky on TSLA for a variety of reasons:
1. "bad" Elon; lose the hyperbole, stick to execution; better, cheaper, faster
2. poor history of execution (tho that may be changing; Shanghai and MY as examples)
3. valuation

I like TSLA for a variety of reasons:
1. "good" Elon; at the end of the day, the man is an innovator and disruptor
2. first mover in the luxury BEV space, achieving scale
3. I think its power train tech is tops

It seems to me most bullish articles on TSLA rely on the notion that the market for BEVs will continue to grow, and TSLA, as a successful first mover, will capture the lion's share of that growth. Overall, I'd feel better about that story if the cost to produce a battery went from, what, $10,000-$12,000 to half that; if it did, I think you'd have a shot at a $30,000 car. But, in any case, while I think the traditional OEMs are having their difficulties in producing decent BEVs to compete with TSLA, it does not make sense to me that, over the next 3-5 years, the traditional guys will all fail to make decent BEV offerings. If memory serves, VW's CEO said, about a year or so ago, that there was a 50% chance German auto makers would fail, due to all of the disruption (led by firms like TSLA) that the industry faces. Facing an existential risk, my bet is that the traditional guys get their act together. Plus, there are a "bevy of BEV" makers in China TSLA must go up against.

I have also never understood the urge to cast TSLA as a technology company. This is, at the end of the day, a car company. I know, I know, power walls and solar roofs. When that business becomes a material part of TSLA's business mix, I'll take note. Until then, there's nothing TSLA does that traditional OEMs aren't also doing; it's just that TSLA has been doing a better job of it. And, that's no small thing.

I just question how durable TSLA's current advantages are, and whether it'll have the balance sheet to compete in the car market of 3-5 years from now. A recession will come sooner or later, and it would be a good idea to clean the balance sheet up before then; hope they do.

Best of luck to all.
DoctoRx profile picture
Tim, it's always interesting reading your comments. Thanks for sharing. FWIW, I do think TSLA has many characteristics of a technology company, but mostly it's applied technology a la AAPL. How long-lasting will any advantages it has today be? Stay tuned...
@chicagotim1 @DoctoRx

How much will Tesla carOS and Autonomy software be worth in the future?

Tesla's advantage? 'It's the software, stupid.'

Tesla’s plan to leave the auto industry behind on in-car infotainment

“As the driver becomes less necessary, there will be more options for in-car purchases and partnering with outside vendors so that you can buy stuff from inside the car, probably even buy stuff for the car from inside the car,” said Brian Moody, executive editor for Autotrader.

"“It gives [Tesla] more control over their vehicle as a platform for other services, for things like Netflix,” said Kaufman. “If you can make your vehicle a platform for other services and for other companies, there’s a lot of money for you."
@chicagotim1 @DoctoRx

As I mentioned before, great article Doc!

IMO, Tesla is very difficult to value and vulnerable to considerable mis-pricing by investors. I think the best analogy is Amazon, not in that they're in the same markets, but because they are a tech company that serves many markets.

Ten, twenty years ago if one tried to value Amazon as a retailer or even an online retailer, the valuation would be considerably less than today. Retailers are simply not that profitable and have very small margins. Similar can be said of auto manufacturers. So here, Tesla and Amazon are very similar, initially viewed to operate in somewhat capital intensive markets with very low margins. But like Amazon, Tesla is actually in many (though different from Amazon) markets: energy storage, solar, and software.

And like Amazon, it is a tech/software company, where the software is very important to Tesla's overall business strategy. And like Amazon, and unlike other retailers and auto manufacturers, Tesla has a very large software employee base and know-how.

Continuing this analysis and seeing where Amazon is today, it can be seen that a large part of Amazon's value is due to software, which allowed them to enter many more markets: web services, AI (Alexa), online ads, etc. Similarly, Tesla's future value may lie in its autonomous software, carOS, and other software (apps, battery, powertrain mgmt software, etc.)

Just as an example, we can breakdown Tesla's future potential opportunities (not counting any future areas that may yet be unpredictable, just as Amazon was ten years ago):

- Global Auto Manufacturer: 50-200B

- Tesla Network (Autonomous Uber): 50-400B

- Tesla carOS (ala Android, iOS, for media consumption, games, apps, ads): 50-400B

- Tesla Energy: 20-200B

- Tesla Architectural Solar*: 20-200B

*Solar roof shingles are just the start; eventually windows and many other building material will have integrated solar.

Make a probability weighted estimate of these future opportunities and then discount this sum back from about 10 years in the future. The current market cap seems very reasonable (or undervalued) given all the future potential. Lot of these have wide ranges because the market size and Tesla's success in it is TBD.
Apropos of nothing more than reading a bunch of comments about how Tesla is demand-constrained, just thought I'd include one piece of verified data: I just heard from Tesla and they hope to have my Model 3 ready for pickup 6 weeks after ordering it. Also, there wasn't a single available inventory car in the country to match my order...so much for all those inventory claims.
DoctoRx profile picture
Traveler, thanks for sharing your experience. It's always helpful to hear real-world information. And: enjoy your Tesla!
watchingfromabove profile picture

Woohoo! Congrats on your purchase. The only "pain" I had with Tesla was the delivery experience in that they told me 4 times the car would be at the delivery center on an earlier date certain. It wasn't until the 5th that it actually arrived. The good news was that it was pretty flawless upon inspection. My understanding is that this situation no longer exists but mentally prep for some of that.

At this time of year, I would call my delivery specialist and develop a rapport so you can ask them to personally check on things for you.

What color and model did you decide upon? You can PM me if you have any questions that I could help with.
Solar Investing profile picture
One of the best articles yet on Tesla. Thanks author!
DoctoRx profile picture
Solar - you're welcome! Thanks for the compliment; it's greatly appreciated.
aldol profile picture
i found out that some activists sue their pension funds if they do not invest "adequately" in climate change type industries.
this would explain why Tesla stock defies gravity, notwithstanding the abysmal
refueling times
Mktneutralhedger profile picture
It might be an element. For a stock that has gained so much so quickly I would have expected a normal correction towards $310 at least. Instead it's behaving in a weird way. Probably some managers decided to give the benefit of doubt till next quarterly result too.
When you can refuel your car at home, anytime, without having to pay any attention to it whatsoever while it refuells, it's incredibly convinient. My car always has all the juice I need. Even IF I used a supercharger, 5-10 minutes for a top up will very more than likely be more than I need, which is really not a long time in the age of youtube-on-a-massive-screen-in-your-car.
karlwenn profile picture
Man you can sure tell when commenters don't actually own a Tesla.
Holger Investor profile picture
A very bizarre scentence is:

"Global public opinion is continuing to swing toward TSLA's vision of our energy future, which opens up huge growth potential for its products."

It is indeed correct that the left green media promotes visions of dirty wind & solar energy in many countries and many of the poeple in these countries believe in such bullshit.

Wind & solar power is generated acc. to the coincidences of the weather, daytime and season. In the grid where demand and generation needs to be equal at any moment such electricity is (nearly) of no value. It is like a X-mas tree on dec. 29.

As these facts are wellknown it is in many countries a situation where subsidies on dirty wind&solar are enacted by left governments and ceased by more realistic minded governments. Sometimes subsidies are slasched with backwardation. It seems difficult to make a steady profitable business out of it.
DoctoRx profile picture
HI, the strong institutional support for NEE over other utes suggests I'm on the right investment track here.
@Holger Investor
Too bad they can't invent something to store that energy.
Also too bad it's pretty cheap to have your own little powerplant at your house which can also fuel your car providing ROI on every electrical/electronic product you then own.
Does the fast lane mean that there is no real demand in China and almost zero demand in Germany for Tesla's? The demand in the US is off nearly 40 percent. There is no profit and over $24B spent so far. Tell me again about the fast lane?
Fast Lane= Record deliveries that last two quarters.
Great article from a long-respected and conservative SA author. We also have Jim Cramer turning bullish on both the brand and the stock. Similar other examples by other investors as well. We may have indeed reached a turning point for the stock. Shorts should pay heed!
DoctoRx profile picture
Fuzzballs, thanks for the compliment, and for pointing out that I am not a lone visionary. Sometimes the tide turns, and (as an analogy) buying AMZN at $200 has a better risk-reward than buying at $2000 when it appears safe.
Mktneutralhedger profile picture
Jim Cramer? Wow, that's another reason to walk away!

"... buying AMZN at $200 has a better risk-reward than buying at $2000 when it appears safe."

Wow! Couldn't have said it better!
Doc, I enjoy your articles and think you present a pretty compelling case here, while also acknowledging the significant risks. I’m not long the stock, though we do love our Model 3 Re: Tesla’s lead, Porsche made a real effort with the Taycan, and it is slower than the P100D and costs nearly twice as much. (Also enjoyed your recent article on MRK, keep up the good work!)
DoctoRx profile picture
User '711, thanks for your comment; I appreciate it. It's nice you pointed out how much of a price:performance lead TSLA has over Porsche (and some others), which overcomes the tax credit loss.
This has been one of the more entertaining SA articles/blogs ever. is Elon Musk like brethren Bernie Madoff or is he the next Steve Jobs? Not sure I know the answer, but I'm impressed by what EM is doing both in space and on the planet. I own only a teaser position but would buy more, if TSLA price came down 20-25% from current.
DoctoRx profile picture
Hksche2000, I liked your comment. Fascinating story, isn't it? GLTU.
@DoctoRx wrote: "Daimler said in February it would pursue cost saving measures after fourth-quarter operating profit plunged 22 percent, hit by trade wars, rising costs for developing electric cars and an industry downturn."

Interesting that you mention Daimler's profit plunge but neglect to comment anything on Tesla's accumulated deficits of over $6B or their inability to generate an annual operating profit. Despite Daimler's profit plunge, they still recorded a profit and do so year after year. Please comment on why these fundamentals are missing from your analysis.
DoctoRx profile picture
BA - b/c everyone knows TSLA is a young cash-burning company.
If 17 years is young, how old is not young?
You stay young as long as you still have top line growth. @bull_rider
Very Nicely Done. Glad to see you pointed out the risks involved as well. But if those risks weren't there we wouldn't get the cheap shares and buying opportunities we have...
DoctoRx profile picture
Brandon, thanks for the kind words. You made a key point. Stock is cheap if Musk et al succeed.
NYC1965 profile picture
I doubt it once the 4 qtr, deliveries number come out and especially when the 10k come out
Tiki Bar Capital profile picture
Interesting, Doc. I'm neutral on TSLA. But one thing I don't understand is why a traditional auto maker would pledge to eliminate ICE cars by 2040 or any other date.

What if demand for ICE vehicles remains high? That seems as likely as not in the US, Eastern Europe, Africa, Asia, and Latin America. Isn't it reckless to pledge your firm's future to a business plan that faces a high likelihood of conflicting with market reality?

Of course, there's nothing wrong with making electric cars. TSLA's got a great thing going. So why wouldn't Mercedes pledge to make both ICE and electric until demand for one or the other dries up?

I must confess that I have little respect for corporate virtue-signaling. We all know Mercedes would retract the no-ICE pledge in a heartbeat if it would boost the bottom line. Firms that avoid foolish promises needn't worry about being called out for hypocrisy.

DoctoRx profile picture
TBC, you answered your own question. Daimler apparently doesn't believe in the EV movement. So they have a revocable 2040 pledge, done for public relations as it's popular in Germany and in most of their other main markets. That's my interp.
Tiki Bar Capital profile picture
You said it with greater brevity.
Tiki Bar: Plus, if the feeble argument re the HEV and PHEV, areas Tesla can't compete in, become major areas of growth, as I expect for at least a decade or more, that will likely greatly extend the life of the ICE as a thing, even if pure ICE cars become a rarity.

The Tesla bulls love to pretend the competition doesn't matter, but their arguments for that are super weak to non-existent.
Captain Crook profile picture
I find it to be great fun reading these comments, especially the negative ones. My wife & I drive each our TMS, both more than paid for by TSLA stock. Yes, I'm also a Tesla long investor and thanks to the FUDsters in shorts there is a load of money to collect. When the FUDsters have success, I buy. In 2017 I bought at an average of $ 240 in January and March (a bit late regretfully) and sold off half my holdings in June at an average of $ 378. In March 2018 I started 'buying back' a bit carefully at average $ 280 and then some more in in May slightly lower and had a total average of $ 253. I then again sold off half my holdings in mid December 2018 at an average in the high $ 370's. This time I started buying back a bit early, but by August 2019 my average was in the $ 240's. I sold off a little bit a fortnight ago at $ 356, just in case the Cypertruck was a total disaster, but bought it and a bit more back at $ 329 on November 22. I also ordered a Tesla Y and a Cypertruck that week end.
I'm ever so thankful for the FUDsters wearing shorts, hadn't it been for you, I would have had to pay for our cars myself. Please keep the good work up, so the Model Y and the Cybertruck will be payed in full after taxes + leave a nice profit in addition in the end.

From where I stand, I see TSLA reaching $ 540 when China is running 3000 TM3 a week and starting production of the TMY at 1000 cars a week. When Fremont makes 5000 TM3's a week and 5000 TMY and also deliver the TMS & TMX in Raven and plaid versions in addition to the 'modernized' LR at about 2000 a week. That might be already at Q3 2020, but I expect some Mr. Musk timing, so let's say Q4 2020.

By Q4 2021 the TMY should have a weekly production of at least 15 000 a week, the TM3 at least 10 000 a week, the TMS & TMX at least 2500 a week, the Cybertruck at a minimum of a 1000 a week, the Semi a minimum of 200 a week and the roadster at a minimum 250 a week and that's when the fun really starts. After the Q4 2021 I guess the FUDsters in shorts will have lost their shorts, but they hopefully will be so angre that they will continue their great work for people like me.

If and when Tesla gets to where I am confident that they will and that only 4-5 years from now, Mr.Elon Musk will get his 50 B worth of additional TSLA shares and I'll be 'stinking rich'!

And it is all to the great work of the FUDsters. So thanks!!!
watchingfromabove profile picture
@Captain Crook

" My wife & I drive each our TMS, both more than paid for by TSLA stock. Yes, I'm also a Tesla long investor and thanks to the FUDsters in shorts there is a load of money to collect."

There is something ironic and fitting when people who are desperately trying to bring Tesla down for their benefit provide the funds to purchase the products that keep them a going concern. I'm pleased.

That is Karma in action! ;-)
Captain: Good luck assuming there will be steady demand for 25,000 Model 3 plus Y cars in 2ish years. The Model Y is merely a slightly bigger and uglier Model 3, which will no doubt heavily cannibalize model 3 demand. Plus the Model Y isn't really a SUV, so good luck expecting all that demand for it.

Then you ignore all the solid competition coming out over the next two years, which will collectively be eating MUCH of the potential Tesla demand with a nice range of new models at a variety of price and function points, including things like REAL SUV's.

How well has just pretending that Tesla stock can do nothing but go straight up as a trend worked out for the bulls for the last 5 years? Answer: not very. Not much reason to change that outlook, given the overall competitive landscape.

Tesla has basically blown its big lead. Prepare to reap the whirlwind -- at a price to book of about 9X what solid car companies are valued at.

Note: I'm NOT saying Tesla will go BK. I'm saying it's operations, growth curve, and products do NOT support a price to book ratio anywhere near 9 (more like 1.5 or so, perhaps), and that all the competition ends Tesla fanboi empty dreams of Tesla having a near-dominance in the BEV space.

And of course, for the next decade or so, there's still the very practical HEV and PHEV choices, which will grow, and which fanbois totally dismiss since Tesla can't even compete in that space.
Solar Investing profile picture
@Captain Crook That's sweet! The FUDsters actually helping Tesla longs. Who would've guessed?
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