To The Moon

Anatomy of the $TSLA trade thesis:

I’m just going to run through my exact thought process on why I put over 70% of my account in $TSLA over the last month or two.

1) The chart. This is the biggest reason why I take any trade and this was no different. The stock made a big advance off the April low and proceeded to trade sideways for over four months with decreasing volatility. If you look at the base, you’ll see early on volatility was wide and loose with big ranges. Towards the end, volatility contracted and the stock started trading very tight.

2) YTD performance. Relative to all other Mag 7 names this was a major laggard. At some point a rising tide lifts all boats and after we saw Apple finally get a big bid, Tesla was the last remaining big tech name that didn’t see a big move.

3) The narrative. Tesla is betting the entire company on AI. Yes other companies have segments of AI but Tesla’s entire future is dependent on AI. Robotics and autonomous vehicles are the pinnacle of AI, Tesla is the big tech face of this whether you agree or not. When people think robotics and autonomous cars, they think Tesla.

4) Rates. Rate cuts are coming and the noise got louder after Jackson Hole. That’s when the chart really started to firm up. Lower rates means it’s easier for consumers to buy cars and for corporations to buy energy solutions.

5) Earnings/delivery comps. Earnings, deliveries, etc. have shown terrible growth over the last year or so. That means any acceleration in earnings will show YoY growth. The market is a forward looking mechanism.

6) Elon distancing himself from politics. Over the last month or two, Elon has slowly distanced himself from DC and made numerous comments that he under estimated how difficult making real change is.

7) Compensation package. Elon was recently given a compensation package that does not pay him unless he delivers 1M robots, millions of Robotaxis and FSD subscribers, and most of all a $8.5T market cap. This finally again cemented Elon’s incentives aligned with shareholders.

This is how my mind works when analyzing the potential of a trade and how I build conviction with a massive position.

A pretty chart is great, but when you can add many layers to the thesis that’s what makes the opportunity special.