This is the big thing about Tesla that people don't understand
(REUTERS/Stephen Lam) My name is Elon Musk and I build cars.
Tesla had an interesting week. The company's stock dipped about 8%, after surging steadily over the previous weeks toward its all-time trading high of $291, reached last September. Tesla closed out the week at $260.
The stock slid on the downgrades of several Wall Street analysts who cover the stock. The important comments on Tesla's future fortunes came from Deutsche Bank's Rod Lache, who changed his rating to "hold" from "buy," but also raised his price target, to $280 from $245.
Lache argued in a research note that Tesla's value prospects are already reflected in the stock price — you could buy it, but in a sense the company's future growth has already been bought by investors, and that's what's driven the stock price higher over the past two years. So if you buy now, you're not going to be purchasing that growth. It's too late.
On Friday, Tesla announced that it had hired Ganesh Srivats, an executive at Burberry, to be the carmaker's North American luxury czar, Bloomberg reported. If hiring a Burberry executive to revamp an important Silicon Valley organization's sales-and-marketing apparatus sounds familiar, that's because Apple hired Burberry's CEO, Angela Ahrendts, to run its retail operations in 2014.
Bloomberg's Dana Hull quoted New York University professor Scott Galloway, who made the bold claim that Tesla isn't a car company — it's a luxury brand.
And at the Allen & Co. conference last week, Tesla CEO Elon Musk said that the Model X SUV, the new vehicle Tesla is set to launch in the next few months, could double Tesla's sales, which are expected to come in at around 55,000 this year (up from 32,000 last year).
(YouTube/nbkagzw13) The Model X has been undergoing road tests prior to its launch.
A vast misunderstanding
Here's the thing about those three events: only one person in the mix seems to understand what Tesla actually is.
Not surprisingly, it's Musk.
Ever since Tesla survived its near-death experience in 2008 and surged forward to become the most important new car company in a century, it's captivated the imaginations of people who wish it wasn't a car company.
Wall Street wants Tesla to be a smoking-hot technology growth stock — effectively, a Silicon Valley startup with 50 employees, 100 MacBooks, and exponential expansion in its future.
Those people who concede that Tesla is producing a product, rather than a social network, want it to be like Apple: A company that creates beautiful, high-tech things and sells them at massive profit margins to a cult-like customer base.