Although I don't tend to talk about investments here on LeaseCosts, this topic is a perfect mid-point between the auto industry and the investment one. Robb Arnot, a prestigious American entrepreneur, mentioned on the Rational Reminder podcast that:
How extravagant to your growth assumptions have to be to justify the price? Extravagant to the point of implausibility. Tesla, if you assume 50% annualized growth for the next 10 years, 50, then 50, then 50, then 50 compounding. You get to 55 times today.
Amazon grew at 26% a year. That’s enough to give it 11 times the size that it was 10 years ago. Now that is extravagant growth. That is phenomenal. But you’re assuming at 50% growth that Tesla will have five times the ten-year growth of Amazon.
Well, thing is that Tesla just announced sales in 2021 were up by 87% compared to the previous year and "Musk said in October last year (2020) that Tesla will be able to maintain an annual growth rate of more than 50% for “quite a while.”
Kudos to the Tesla team for doing this in 2021. This past year has been tough for the automotive industry and I have to say I’m shocked with those results with all the supply chain challenges. If Tesla managed to come ahead in such a challenging environment, I can’t imagine how well they could come ahead in the future.
Either way, I guess that’s all already priced in! Congrats Tesla!
