Article Highlights:
- Tesla’s stock is down 40% in the past 18 months.
- But there’s no doubt the electrification of the global economy is a huge mega trend.
- Fortunately, there’s a way to profit that beats owning Tesla shares hands down.
Good ol’ Elon. He’s at it again…
According to Tesla CEO Elon Musk’s recent comments, his company might not produce any more vehicles for common consumers. That’s because Tesla’s million-strong fleet of autonomous “robotaxis” will supposedly prowl the streets by the end of this year.
The general idea is that a Tesla — once equipped with the company’s $6,000 full self-driving package — would no longer depreciate in value.
Instead, it would become an “appreciating asset” for its owner as the vehicle rolls through town, picking up customers and fares.
When someone asked on his Twitter feed if that meant “consumers have limited time left to buy a Tesla car,” Musk’s answer was an emphatic “Yes.”
It’s a genius move — like a timeshare salesman shouting: “Once these babies are gone, they’re gone forever!”
But don’t bite on Musk’s latest hope and prayer to save his company.
If you want to make money from the disruptive electrification of the U.S. economy, there’s a much safer, proven way.
Promises, Promises
Keep in mind that Tesla has offered — and then withdrawn — full self-driving as a buying option in the past.
And its own salespeople say full self-driving is still “very far away.”
Then again, Musk needs to do what he can to keep buyers interested in both Tesla’s cars and its stock, which is down 40% in the past 18 months.
TSLA’s 40% Plunge
(Source: TradingView.com)
The clock is ticking.
In five years, the company quintupled its long-term debt from $2 billion to nearly $10 billion.
And in the last 12 months, it has paid out nearly $700 million in interest expense (up from $650 million in 2018).
The Safer, Better Way to Play
There’s no doubt the electrification of the U.S. and global economy is a huge mega trend. But there’s a safer way to play it than owning shares of Tesla.
You could buy the iShares U.S. Utilities ETF (NYSE: IDU), for instance.
If we’re all going to own electric vehicles of one kind or another in coming years, our cars, trucks, forklifts, airplanes and buses will be pulling a lot more power out of America’s power grid.
It’s not sexy. But with the exchange-traded fund (ETF) up 14% in the last 18 months, and more than 60% higher since 2013, it sure beats owning Tesla shares hands down.
Utilities ETF vs. Tesla
(Source: TradingView.com)
My bigger point here is that rewards in the stock market go hand in hand with risk. This ETF offers you a way to have more of one, with less of the other.
Best of good buys,
Jeff L. Yastine
Editor, Total Wealth Insider
