Tesla - Buy the Rumur, Sell the Fact.

Macro Perspectives: Thu 25 Mar 2021

With the global politicians organising this week to discuss the coordinated climate action game plan, it's beginning to look like we might be in the "buy the rumor, sell the fact" period for the clean energy trade.

The one clear proxy-stock for the likelihood of a multi-trillion dollar clean energy movement, has been Tesla. This is what happened to Tesla shares when the global pandemic flipped the probability of a Trump second-term.

Tesla went up 8X into the election and extended higher following the election. Why? Because Trump was an obstruction to the globally coordinated climate action plan (Paris Agreement and Climate Action 100+). Global money poured into Tesla as a liquid way to play the transformation of global energy. Now, in the "realisation phase" of this climate action movement, money has been moving out of this proxy stock, Tesla

Whether or not the climate action spend will happen is not in debate. The new administration is already talking about $3 trillion, and with an aligned Congress, it will pass.

The question is: Will the clean energy economy be a "winner takes all" proposition?

At an $800+ billion market cap, just two months ago, Tesla shares were reflecting that outcome. For perspective, the total amount invested in energy transition in 2020, globally, was smaller than the value of Tesla, at $500 billion (and it was a record value of global investment).

Tesla has been priced as a clean energy monopoly, but the company has no moat - the competition has been investing and building, and the competitive landscape looks like it will be a crowded one for Tesla.