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Venture capitalist and the founder/CEO of Social Capital Chamath Palihapitiya took to Twitter recently to give his hot take on Tesla (TSLA). Palihapitiya appeared to be responding to a tweet by Reilly Brennan, a founding general partner at Trucks Venture Capital.
Brennan quoted Morgan Stanley’s notes on Tesla revenue and Palihapitiya clearly disagreed with the investment bank’s points. “After 20 yrs of building tech co’s, I have learned that these backward-looking [sic] takes are ALWAYS wrong and cement more support for the startup in question, not less,” the venture capitalist wrote.
After 20 yrs of building tech co’s, I have learned that these backward looking takes are ALWAYS wrong and cement more support for the startup in question, not less.— Chamath Palihapitiya (@chamath) July 8, 2020
So here’s a simple HOT TAKE on $TSLA https://t.co/TiwnepXDUz
Social Capital’s CEO listed down three points opposing Morgan Stanley’s notes, before providing his counter-argument as well. Below is a table of Morgan Stanley’s notes on Tesla’s revenues and Palihapitiya’s counter-arguments in no specific order.
Palihapitiya finished his Tesla hot take saying: “So TSLA and new OEMs (as they go public) will tend to over-perform [sic] because market know[s] there’s little market risk left - adoption, consumer desire is clear. Execution risk still exists though so OEMs that can/have deliver supply will be the long term winners.
“You can safely be long New OEMs and short Legacy OEMs as a strategy and will probably make a lot more money predictably than by trying to short one of these rocket ships with a ‘valuation thesis’,” he tweeted.
When @79woodward asked Palihapitiya why more legacy automakers weren’t releasing their own electric vehicles and following Nikola’s business model, the venture capitalist referred to “The Innovator’s Dilemma.” Written by Harvard professor Clayton Christensen, “The Innovator’s Dilemma” discusses how successful companies can lose market leadership from upstart disruptive innovators.
Tesmanian has found a video (seen above) that explains Christensen’s thesis. As Palihapitiya suggested in his reply to @79woodward, “The Innovator’s Dilemma” could be applied to Tesla’s past and current circumstances and may even predict the EV automaker’s future trajectory. It may also specifically explain why Tesla's growth has not been evident for the past decade and why investors like ARK Invest's Cathie Wood have been able to see past TSLA's present position and into its future.
A follow-up video, provided below, about the S-curve in relation to innovation may also support Christensen’s thesis. ARK Invest CEO and founder Cathie Wood seems to understand plenty about disruptive innovation which might be why she has been mostly accurate about TSLA over the years. Wood’s perspective on disruptive innovation may also support Christensen’s thesis in “The Innovator’s Dilemma.”