Elon Musk trolls the shorts.

Elon Musk sent out this tweet after Tesla beat expectations and the stock hit a new all-time high.

Elon Musk-Tesla

This is not the first time that short sellers have been crushed by Tesla. Walter Hellwig, who helps manage $17 billion at BB&T, said this about Tesla back in 2013.

There’s not enough demand for high-priced electric cars’,” Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama, said in a phone interview. “At some point, it hit the breaking point. There’s a buying panic because they want to get out of the position before it goes higher.

This is what happened since Walter made that prediction. 


It's not about the fundamentals

Walter's argument is not a new one. People see the cars and trucks we drive now and cannot imagine a world where electric cars are the main source of transportation. However, lets back up to the early 1900's. During that time period horses and buggies were the main source of transportation. 

The Tyee did a series on the transition from horses to cars. From the article:

Given the animal’s significant role in the industrial revolution, horse populations grew exponentially. North Americans employed four million horses in 1840 for agricultural work and travel. By 1900 they were harnessing more than 24 million (a six-fold increase) to plow fields, as well as pull street trolleys, drays, brewery wagons, city vehicles, omnibuses and carriages.
— Andrew Nikiforuk

That is a staggering amount of horses. However, with that many horses, there was bound to be health problems. Again, from the article:

An urban workhorse dumped between 20 and 50 pounds of manure a day on the street along with a gallon of piss.
— Andrew Nikiforuk

I know we like to talk about "the good old days back when- fill in the blank" but I am glad I sidestepped that period. 

We often overestimate how quickly things will change. Despite horses posing a major health problem for urban cities, it took another 50 years for cars to completely replace horses. 
 


Electric vehicles accounted for ~1% of the cars sold in the U.S in 2016, so the shift to a world of  only electric cars is not happening anytime soon. However, that does not mean it will not happen. That is what Tesla bulls are betting on, a future that looks d/f from the past. So it does not matter that Tesla loses money now, what matters is the future.  

This leads me to an important truth I have learned about investing. Stories matter more than fundamentals for a certain class of companies. Tesla is one of those companies, Wendy's is not. Companies that are out to change the world will have a chorus of believers until they are proven wrong and that can take a long time.
 

Follow the Money

Another important truth I have learned is to follow the money. Especially if that money starts investing in projects that will destroy its current business. Earlier this year, Saudi Arabia sought funding for solar and wind projects worth $30-$50 billion. Don't think electric vehicles are the future? Fine, you may be right, just saying...