Does "Cool factor" take a part of your valuation?

No.
Or rather, I hope it doesn't factor into my decisionmaking. That kind of thinking is, in my experience, antithetical to my style of long-term investing.

Nevertheless, I appreciate your putting that out in the open and admitting factors like that play in your own decisions. Look at it this way, however:

if such factors like that are appropriate "+" investment tags, can you not then also admit you have to concede that when a dingbat flings half a Model S into a synagogue, and dies, or someone bores a hole through two concrete barriers/walls, and it catches f*re, or a drivetrain goes "clunk", those justifiably are "-" points for the company? At very least, I think you'd have to say they're un-cool....

Others may have differing opinions. That's cool.

I'm pretty methodical in my long-term investing. I need to see the demand and the growth trajectory, and I need to make my own revenue/earnings projections several years out. It doesn't matter how cool the company is, it doesn't impress me. But if the company has a ton of die-hard fans, that does show that the product is likely very good and does affect my projections for future demand.

Only to the extent of contributing to investment (product) potential, not per se.

Investing often results in losing money and that hurts (ooouch). Over time I found myself more likely and willing to invest in businesses that have some sort of cause attached to it. That cause lessens the pain if I loose money. Also the cause has to have relevance to me, ie not all causes are created equal in my little world.

To the extent that "cool" translates into "aspirational product" translates into sales, then I think "cool" is a fine plus-factor to consider. Buying a car is a more emotion-driven decision than, say, buying a toaster. Tesla has a valuable brand name, and that value directly affects the long-term stock price.

DaveT said:

I'm pretty methodical in my long-term investing. I need to see the demand and the growth trajectory, and I need to make my own revenue/earnings projections several years out. It doesn't matter how cool the company is, it doesn't impress me. But if the company has a ton of die-hard fans, that does show that the product is likely very good and does affect my projections for future demand.

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Dave, I always value and appreciate your posts, especially your mega posts. Maybe you have already answered this elsewhere, but I am wondering, do you own a Model S? And if so has owning the car influenced your investment in TSLA?

Hey Gene, I've owned an S for almost a half a year. It's a great car and it's helped to understand the ownership/service experience better. Most of my investment views and decisions regarding TSLA were already formed before becoming an owner. I did a lot of product due diligence in 2012 and early 2013 by test driving the Model S many times, stalking the stores, and reading every ownership experience I could find. Also, I had driven quite a few performance/luxury cars so I had a good idea of where the Model S fit in with the competition. I also was able to understand the disruptive nature of the car by having a tech/software/business/investing background. But it's been helpful to understand the ownership/service experience - experiencing charging vs refueling, seeing both sides (good/bad) of service, taking a 500m road trip, getting into a minor accident, getting my car wrapped, trying to get parkings sensors retrofitted, etc. One of the main reasons I became a Model S owner was because I felt like I had reached the limits of my Tesla learning (this was after spending 20+ hours a week on Tesla-related matters for 18 months). I felt like perhaps owning a Model S would give me a bit more info on the car and ownership/service experience that would help with my investments. Overall, I think it has.

DaveT said:

Hey Gene, I've owned an S for almost a half a year. It's a great car and it's helped to understand the ownership/service experience better. Most of my investment views and decisions regarding TSLA were already formed before becoming an owner. I did a lot of product due diligence in 2012 and early 2013 by test driving the Model S many times, stalking the stores, and reading every ownership experience I could find. Also, I had driven quite a few performance/luxury cars so I had a good idea of where the Model S fit in with the competition. I also was able to understand the disruptive nature of the car by having a tech/software/business/investing background. But it's been helpful to understand the ownership/service experience - experiencing charging vs refueling, seeing both sides (good/bad) of service, taking a 500m road trip, getting into a minor accident, getting my car wrapped, trying to get parkings sensors retrofitted, etc. One of the main reasons I became a Model S owner was because I felt like I had reached the limits of my Tesla learning (this was after spending 20+ hours a week on Tesla-related matters for 18 months). I felt like perhaps owning a Model S would give me a bit more info on the car and ownership/service experience that would help with my investments. Overall, I think it has.

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Dave, thanks for your reply. In my case, I bought my S in March 2013. Within days of owning it, I loaded up on the stock!

gene said:

Dave, thanks for your reply. In my case, I bought my S in March 2013. Within days of owning it, I loaded up on the stock!

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That was a good time! If you would have bought your car just a few months later you wouldn't have been able to get nearly as many shares.

Trust but verify

The cool factor of a product or a service is relevant to investors in a sense that it constitutes verification of a promise made by a business to its customers.

At early stages of Tesla story, Tesla team were making a promise to deliver good bev to customers. Now the team extends that promise to deliver new bev models.

The best way to verify their promise is to drive a car.

The second best verification is to listen to a chorus of Tesla drivers and hear what they have to say about their experience.

If an investor performs these verifications, then it matters less what Elon or anyone else on Tesla team has to say. Their best communication comes through their actions and through their customers voices. No words from Tesla team can compete with that.

All other talk is just words and noise. ER conference calls, Q&A sessions, analysts' notes, all that info is secondary to verifying the promise by test driving the car.

Investing decisions involve risk. Risk is mitigated commensurate with using verified data when making decisions.

That is why so often the best response to a bear argument is to tell a bear to drive the car. The driving experience circumvents all the noise of unverified words.

My verification before investing consisted of checking the car design, as that was the best I could do at the time.

Didn't know where to put this but this seems like the best place.

I spoke with Tesla head office yesterday and asked them about software version 6.0. I was told the following:

1. It was released 2 weeks ago to "early access providers". This is a small number of owners who get the releases early to try them out and discover bugs, etc. (lucky!)

2. Normally it will be released about 1 month after they get it - I was told around late August for the rest of us pions.

3. I asked what it will include I was told they can't divulge anything beyond what Elon has tweeted about. The only thing I could get was that we will be able to name our car and for example walk up to it and say "-name of car- open the handles" and they will open.

4. There are over 1,900 changes included in this update making it the biggest yet! This is why the beta-testing may take a little longer than usual.

I hope there are some really 'cool' features included. I don't know if a software update would move the stock but if there is so egging groundbreaking then it is possible. So end of August is the time to plan for this.

Glad you brought this up, and I will confess, that the "cool factor" does increase my emotional attachment to the stock. I didn't realize it until I started looking at how much I'd be selling (I'm looking for a house now and have "parked some cash in Tesla stock" for a few months (actually nearly a year) - good move so far, although many friends questioned my thinking). I realized I like having the stock because it's not only cool, but I feel good about the good Tesla is doing.
Auzie's post is a good reality check for me, and I have to say, buying stock of products that you think have a strong future is good advice, and it goes beyond cool, it just makes so darned much sense what they're doing.