CyberDutchie
Active Member
Here's more from Adam Jonas' note this morning:
Is Tesla a must-own strategic asset? Does a large tech firm with adjacency in shared autonomous transport look at Tesla as important to control before somebody else controls it? As both traditional auto and non-traditional tech firms make further headway into the world of miles and data, we believe the discussion around the value, the opportunity and the risks of an investment in Tesla will evolve, if not accelerate. A fundamental question for the Board of Tesla and for all Tesla stakeholders is whether the company is better off disrupting transport on a stand-alone basis or whether it could extract even greater value (while mitigating risk) as part of a larger entity or consortium. This conundrum is as old as capital markets. In our opinion, predicting specific strategic activity/M&A is not the point – it’s the question itself that is important to the investment debate and long-term value creation.
We recently downgraded Tesla shares to EW with a $305 price target. Please see our May 15th report: The Price of Ambition: Downgrade to EW. The most important catalyst for our downgrade is our view that we expect much larger and more well-capitalized competitors to soon unveil strategies that directly address sustainable transport and mobility. There have been numerous developments that suggest to us the continued preparation of an assault by large tech firms on the market for shared, autonomous, electric mobility. While the forthcoming developments we expect may prove as some validation for the core mission of Tesla (accelerating sustainable transport), we believe there may be a new host of competitive risks to consider. Along the way, the market may simultaneously price in the value of Tesla as a strategic/trophy asset, particularly as it continues to build out its extensive infrastructure of vehicle and battery manufacturing assets, charging and service infrastructure and unveils forthcoming milestones in business model (Tesla Mobility or Tesla ‘Network’ as they call it) and automated/autonomous achievements. While the gap to our $511 bull case may be large in percentage terms, it can be achieved with rather modest (yes, subjective) changes in the assumed market share of global miles traveled by 2030 or 2040.
Is Tesla a must-own strategic asset? Does a large tech firm with adjacency in shared autonomous transport look at Tesla as important to control before somebody else controls it? As both traditional auto and non-traditional tech firms make further headway into the world of miles and data, we believe the discussion around the value, the opportunity and the risks of an investment in Tesla will evolve, if not accelerate. A fundamental question for the Board of Tesla and for all Tesla stakeholders is whether the company is better off disrupting transport on a stand-alone basis or whether it could extract even greater value (while mitigating risk) as part of a larger entity or consortium. This conundrum is as old as capital markets. In our opinion, predicting specific strategic activity/M&A is not the point – it’s the question itself that is important to the investment debate and long-term value creation.
We recently downgraded Tesla shares to EW with a $305 price target. Please see our May 15th report: The Price of Ambition: Downgrade to EW. The most important catalyst for our downgrade is our view that we expect much larger and more well-capitalized competitors to soon unveil strategies that directly address sustainable transport and mobility. There have been numerous developments that suggest to us the continued preparation of an assault by large tech firms on the market for shared, autonomous, electric mobility. While the forthcoming developments we expect may prove as some validation for the core mission of Tesla (accelerating sustainable transport), we believe there may be a new host of competitive risks to consider. Along the way, the market may simultaneously price in the value of Tesla as a strategic/trophy asset, particularly as it continues to build out its extensive infrastructure of vehicle and battery manufacturing assets, charging and service infrastructure and unveils forthcoming milestones in business model (Tesla Mobility or Tesla ‘Network’ as they call it) and automated/autonomous achievements. While the gap to our $511 bull case may be large in percentage terms, it can be achieved with rather modest (yes, subjective) changes in the assumed market share of global miles traveled by 2030 or 2040.