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006 - Lee (The Tesla Economist)
Hi there, and welcome to another edition of Intake, the newsletter that brings you the most trusted media and information sources of your favorite founders, experts, and creators.
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Now, let’s get into this week’s feature: Lee, aka the Tesla Economist.
Lee (The Tesla Economist)
Lee is the host of the popular YouTube channel Tesla Economist. Having started just under three years ago, he has amassed 48,000 subscribers and uploaded 900 videos that provide an in-depth analysis of the EV/tech company, Tesla, focusing on its stock and financials. His detailed breakdowns and unique insights make him a favorite resource for many in the space.
- A Brief History of Motion
Of all the creators and media sources you’ve listed above, which two do you depend on, trust, and frequent the most? Why?
”I try to go refer to an as original source as possible, Elon Musk (@elonmusk) is obviously very high in that regard, and knows more about Tesla than anyone else in the world. Therefore I will read everything he Tweets (X), along with every interview he has to best understand his thoughts on Tesla and where various elements are headed, and how they are progressing.
Then the other side of information from sources would be from all the media, Sawyer Merritt (@SawyerMerritt) does a great job of keeping up to date with everything Tesla related, so he covers all facets of information related to Tesla. Which makes it very easy for everyone to stay up to date with any “breaking” Tesla news.”
You are an outspoken supporter of Tesla. What about this company is so compelling to you? What drew you to it initially, and what about its future makes you most excited?
”It started from my background of being an enthusiast of cars, and driving. I like nice cars, and I love driving cars that handle very well, and before Tesla I would mainly buy BMWs for those reasons. However, the Tesla Model 3 absolutely destroyed BMW on specifications and at a lower price point like for like. So I accepted the defeat that Tesla gave BMW, and transitioned to electric.
From there I learned more about the company, CEO, mission, and was mesmerized. The fact we could see a company that can replace fossil fuels, and offer clean energy and transportation, was a big appeal, and it felt good to invest and support a company with a mission like that.
Then there were also the economics behind it, that energy and transportation could be decentralized. You can create and store your own energy in your home, and then even transfer said energy into your vehicle. No need to go through the processes of drilling oil, refining it to gasoline, and then transporting it to gas stations. Instead it was all possible to generate at home.”
In the beginning of the year, there was a stretch of time where your opinions and investing thesis on Tesla flipped. Can you explain what happened and what lessons you learned about Tesla and investing during that period?
”I was admittedly too mesmerized by Elon and his accomplishments, and simply believed too much into what he said, and thought he was capable of everything he said Tesla would do. I bet quite big on him achieving these timelines he had set, and it looked so incredibly profitable.
The main thing that sobered me up to this, was the disappointing progress that we have seen with the 4680 cells.
Most of my fundamental analysis had been based on the EV business model, as it is too hard to quantify FSD or Robotaxis. But it didn’t matter, with these new 4680 cells, the vehicles were going to become so much more profitable. But we are at about 2% of the rate we were expecting by now.
The biggest lesson that I learned from this was that the market was not valuing Tesla the same as I was, and I hard to learn and discover where I had wrong.
My main turn around was seeing that the Mexico factory with the new model was not dependent on 4680 cells, and Tesla would be able to grow with traditional LFP cells, when it came to gen 3 manufacturing.”
How do you approach evaluating a company before investing in it?
”Fundamentals - how profitable is the company now, or how much is it losing as the case may be. Then look at what the company is planning on the future, and work out how much difference that will make to the financials.
For example, if gross margin is good, but operating margin is not, and if said company grows, then gross profit will increase, but if operating expenses don’t increase as much, then there will be a higher operating margin.
In other words if sales double, net profits may increase 5 or 10 times, depending on these ratios.”
Could you share some insights or tips for beginners who are interested in investing?
”A lot to factor in, depending on age, and risk tolerance. If you are older and have a low risk tolerance, and not a great deal of knowledge on investing or stocks, then its probably best just to stick to an index fund.
However, if you are looking for the big pay day, and are younger and can take some chances, then look into asymmetric investing. Which are investments where the upside significantly outweighs the downside, however the downside could be pretty bad when compared to an index fund. And expect volatility.”
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