For those uninitiated in the Mysteries of Tesla, it's natural to experience some cognitive dissonance when trying to square Tesla's stock price with its actual business. In a rational world, we would be concerned when the very idea of profitability is a risk for shareholders. Or when when the CEO tells shareholders with governance concerns to go buy a rival's stock. Or when the bull case is built not on the cars but on the emotions that the company produces.
But if you've been around Tesla for more than a few minutes, you know well that the standard rules don't apply. One person who's spent more than a few minutes thinking about Tesla is Greenlight Capital's David Einhorn, a long-time resident of Shortville and a stubbornly persistent believer in the idea that Tesla ought to comport with the physical laws that govern the universe, despite all evidence to the contrary.
In his latest letter to shareholders, Einhorn is at it again with his reasoned analysis and factual statements and other rhetorical tools that have approximately zero effect on Tesla and its adherents. Einhorn's gist: Tesla is no Apple:
When one person buys an Apple product, it makes the experience for other Apple customers better by supporting the developer ecosystem. This network effect attracts a stable and growing user base. TSLA is unlikely to sustain a competitive advantage by having a network of charging stations or by accumulating driver data.
Competition was very slow to develop for Apple ... By contrast, every major car company in the world intends to compete with TSLA in electric vehicles.
Important points, both. But Einhorn just can't seem to get over that whole profitability thing:
"When Apple launched the iPhone, it was immediately profitable," Greenlight wrote. But Tesla "does not make money selling cars and Mr. Musk shows little interest in profits."
Generally speaking, a genuine interest in profits is one of those traits investors kind of expect in an executive. But as we've said before, Tesla is no ordinary company and Musk is no ordinary executive. He's more of a dream monger. The goal of Tesla isn't to sell a bunch of crap, but to wholly transform the way we power our lives – which somehow to a lot of people seems like an easier task than selling a consumer product at a profit.
Granted, when Tesla investors make the Apple comparison they're not just fantasizing about black turtlenecks and quasi-religious customer experiences (as pertinent as these may be for Tesla). They're pointing to the actual phenomenon of disruption, which could indeed deliver massive returns to Tesla somewhere down the line should Musk and co manage to outflank legacy car companies in making an electric vehicle that the world actually wants.
Any objective reading will tell you that's a long shot, and that Einhorn's criticisms of the Apple-Tesla narrative are sharp and trenchant insights. But sharp and trenchant insights don't move TSLA. This does.
UPDATE: We couldn't have said it any better.