Archives For robertc

Telsa (TSLA) stock hit the skids this week after Morgan Stanley analyst Adam Jonas wrote in a client note and as reported by WSJ:

“We believe the shares are worth $320, but perhaps not so quickly and not for some of the reasons we believe are driving the market,” Morgan Stanley analyst Adam Jonas wrote in a note to clients. He added that he doesn’t foresee the stock appreciating “so consistently and one-directionally from here.”

So Jonas/Morgan Stanley is still bullish and overweight on TSLA, but because it’s a car company?

Toyota (TM), the world’s biggest car manufacturer, trades at $117; Volkswagen, the world’s most impressive car co (imho, behind Tesla) trades on a number of Euro exchanges in the range $179-$218; while Ford (F) trades at $16, GM at $34 and Honda (HMC) at $34.

Yes Tesla obviously makes cars, but to me it looks like a battery tech and electric drive train company. Valued at $320 ..?

How well Tesla can scale this business beyond its own vehicles should determine the company’s forward value, especially since the $35,000 tagged “consumer” Tesla is still well out of reach of most consumers. (It obviously doesn’t look like it for Tesla-philes or Wall Street analysts, but it most certainly is.)

Perhaps Morgan Stanley’s $320 price target is right and the underlying business was discussed in the client note? If so the media missed it.

As an aside, I totally agree with Adam Jonas’ astute observation regarding the “end of driving”:

“Our 15 year [discounted cash flow] coincides with the end of human driving and the dawn of crowd sourced mobility and mega fleets,” Mr. Jonas said. “Assuming people even buy cars at all, what will determine Tesla’s strategic and competitive advantage as a provider of mobility? … The rules are changing and at least some incumbent [auto makers, such as BMW] are not falling asleep at the (disappearing) steering wheel.”

airbnb co-founder Brian Chesky completely nailed the disruption fallacy, at least as it relates to the sharing economy, when speaking at the Aspen Ideas Festival:

“Maybe hotels disrupted what we were doing in the first place. People used to stay in homes. We didn’t invent that idea.”

Marc Andreessen made a similar comment recently about ride sharing services, that in a great number of (mostly developing) countries people still catch a lift rather than own a car.

Time will show that the business models created to serve the industrial revolution were an historic anomaly.

Mobile will paradoxically return us to a futuristic form of the bazaar where there’s price and product transparency across a market and where commerce is significantly more personal, yet because of mobile potentially global.

Any questions about Australia’s ability to produce amazing music (or tech startups for that matter)? Flight Facilities feat. Emma Louise released by Future Classic. It’s a trifecta! Discovered via Stephen Phillips’ awesome new thing

I have posted this album before, but it’s one of my faves and I listen to it often. I love the record for its remarkably chilled groove. It really is something special.

In his article Music Streaming Is Booming, and That’s a Problem for Music Sales Peter Kafka suggests the right price for a streaming subscription “might be $3 to $4 a month” (also see David Pakman’s The Price of Music).

Like everyone I would of course be happy to pay less than $10/month for my Spotify sub, but there’s a bigger elephant in the room.

The problem from my pov, and that of anyone else in a family environment, is that $10 a month only buys a single-user experience. Multiple users are not welcome! That’s really, really bad UX, especially since Netflix and Amazon Instant deliver multi-user.

The labels must allow Spotify, et al, to deliver a “family plan” at $10/month for the simple reason they’re not going to get additional subs from the average household anyhow. Which is a round about way of saying $3/month is the right price, but like Kafka I can’t see the labels buying in any time soon*. They have history of acting too late.**

Lastly, to the issue of streaming being a problem for music sales, of course it is, which Kafka admits. Just as piracy is a problem for sales, academic papers to the contrary (which simply don’t withstand the “bleeding obvious” nature of human behavior).

* Streaming cos could always offer a teaser rate to see what happens to subs, much like the pay-TV cos. Or maybe that’s what they’re already doing ..?

** In 2005 I analyzed music pricing and determined that price equilibrium for a then $15+ CD was somewhere around $5. Would it have “saved” the record biz? Probably not but the point is that in the face of technological change the record labels tend to hold on to their pricing models for too long. Which is odd given that tech change tends to disrupt business models and little else.