Tom Gardner: Hi, Tom Gardner from The Motley Fool
with Morgan Housel, longtime contributor
to The Motley Fool, and we're asking the question,
why do some people hate Tesla so much?
Why do they hate Tesla so much? I mean, it's been
a 15-bagger since coming public as a stock.
It's got a product, a number of products,
Tesla automobiles, that buyers love.
They love their cars. It's got a very innovative,
disruptive leader at the helm. It's a dramatic,
game-changing business. But some people really
hate Tesla. What's one or two reasons why, Morgan?
Then I'll give one or two reasons.
Morgan Housel: I think there's one big reason,
and I think it's almost hypocritical, which
is that a lot of the traits that have made
Elon Musk and Tesla so successful are the
flip side traits of the things that people
hate when he does. I mean, this is a guy who
took on General Motors and Ford when he was
in his thirties, and wants to colonize Mars,
and propose dropping nuclear bombs on Mars
to regulate its climate. This is not the kind
of guy who's going to show up to a corporate
board meeting and speak in perfectly-clipped
Harvard Business School paragraphs. The reason
people love him is because he swings from
the fences and he thinks the rules don't apply
to him, and he's willing to do things that
no one else will. That's why people love him.
There's the flip side of that, which is that,
of course, he's also going to do things that
you don't love. It's hypocritical to say,
"I want someone to do all the crazy things
I love, but not any of the bad crazy things."
I think those things come in the same package.
And there's a long history of that with
Steve Jobs, Bill Gates. Similar thing. What made
them great also had these downsides that people
didn't like, but you can't have one without the other.
Gardner: I think that Elon Musk and Tesla
have gone up against multiple industries that
add up to trillions of dollars of market capitalization.
Oil and gas, utilities, automobiles, energy.
I mean, they're disrupting multiple industries at once.
And those industries, they know how
to buy PR agencies to put articles out and
challenge a single business. And, of course,
there are shorts too. I've shorted stocks,
I'm not an opponent of shorting, but in general,
those who short stocks, particularly professionally,
with funds, generally have a shorter-term
perspective. And so, if they can get news
out there to move a stock down -- we can question
whether that's legal, whether that's manipulation
or not, but there's a reason to try and shake
a stock, and make it volatile in the short term,
and that benefit shorts, no question.
I think that when you get somebody who's as
disruptive as Elon Musk -- you've talked about
his personality. I'll just add his vision,
and how it plays out in front of us. When
the iPad was released, people were shocked.
"What is this? Why would I ever use this?
Ridiculous. Apple is over-promoting this.
This is absurd." Even the iPhone, when it
came out and didn't have buttons to type --
Housel: And it was $1,000.
Gardner: Or, hundreds and hundreds of dollars.
It was like, "This is absurd. Jobs has lost it."
People said Buffett had lost it when
the tech stocks were going insane in the late
1990s. And so, I think when Cybertruck lands,
it reinforces a lot of the concerns that people
have about whether this company is stable.
And so, on day one, what was your reaction
when you saw the Cybertruck for the first time?
Housel: I thought it was a joke. A lot of people did.
Gardner: What is your thought about it now?
Housel: I know it's grown on a lot of people.
It hasn't grown on me yet, but I've heard
so many people say, "At first I hated it,
and after a week I kind of like it."
It's still not for me.
Gardner: I don't think that I'm the target
market for it, living in Alexandria in Virginia.
Our producer, Rick Engdahl, did just say,
"Hey, maybe the next Motley Fool Mobile,"
which is something that we always have at
The Motley Fool, "should be a Cybertruck."
I think the thing that could persuade you
are the specs, the specifications on the Cybertrack.
It's an unbelievable creation. It causes me
to forget the acronym F-150 right away.
And it's center stage now, in a very profitable
area of the automobile industry. I think it'll
do more than $5 billion in sales, the Cybertruck.
But it looks so bizarre. It's so shocking.
People love that the glass broke, and, right,
"You're the narcissistic hero of the world,
and look, you look silly." I know that
Jack Dorsey at one point, the CEO and creator of
Twitter and Square, said, "It's very important
if you want to be an innovator that you're
willing to look silly in public.
You have to be willing to look like an idiot in public
or you're never really going to disrupt."
And I think all of those things swirl around
Tesla and Elon Musk. But there are definitely
some people who just really hate Tesla. They
can't not laugh at the Cybertruck, not question
the business overall, and not wonder if
Elon Musk should be CEO of the business, etc.
And some of those reasons are justified, but I'd
say that all in all, this is a company whose
stock has gone up 15X since coming public.
It's been an incredible investment.
What would you do with Tesla as an investment,
in the Morgan Housel portfolio? Would you
think about investing in it? And if you did,
how would you invest in it? What size position?
Housel: I'm more of a passive investor.
I probably do own it through some fund in there.
But I would just look at it as a very risky
and potentially rewarding play. To get back
to what I was saying, the parts that people
love are also the parts that people hate.
That's just a risk-reward thing. I think if
you're looking at any individual stock like that,
and it's more than 2% or 3% of your
portfolio, and you're starting out and you're
questioning the long-term validity of it,
then I think it should be a fairly small position.
Gardner: I think it's a good idea, as Tom Engdahl
says in our community at The Motley Fool,
if it's a more speculative risky position,
if feels that way, you feel some uncertainty
about it, that having it as a 3% position,
and if it goes on and rises 5X in value and
becomes a $250 billion to $300 billion market
cap at Tesla, which would be incredible,
but I think it's possible, given they are autonomous,
their AI, the technological lead that they have,
I think it's possible. I think there are some
questions about the SolarCity acquisition.
And that's another side of skepticism about
Tesla that comes from the financial community,
about some of the acquisition of SolarCity.
And, hey, everybody wants to know that.
You don't want to break the rules on financial
statements and accounting at all. And that's
an important thing. And I think Tesla -- hey,
every Tesla recommendation I made is up.
Many of them are beating the market soundly.
I believe in it for the long term. But I also
understand why people wouldn't invest in it.
I don't think it should be larger than a 3%
position out of the gate for people.
Housel: I think if you're a very conservative investor,
you should not bet on or against a crazy
genius. And I think Musk is a crazy genius.
Gardner: Well said. Thank you, Morgan!
Housel: Thanks!
