An important
Tesla
event happens this weekend. The company has nothing to do with it, and no Wall Street analysts are likely to attend. Still, it helps explain why Tesla (TSLA) stock is beloved by retail investors and why shares get the valuation multiple they do.
Tesla Owners of Silicon Valley hosts its third-annual Tesla Takeover this weekend. Think of it as EV-Burning Man. There will be food and bouncy castles for kids. There will also be exhibitors including EV maker
Arcimoto
(ticker: FUV) and maker of automotive performance aftermarket products
Holley
(HLLY).
Speakers include Elon Musk’s mother Maye Musk, auto engineering consultant Sandy Munro,
Future Fund Active ETF
(ticker: FFND) co-founder Gary Black, and Twitter/X influencer @DirtyTesLa, among others.
That’s Musk’s family, a car expert, an investor, and a Twitter user that posts videos of his drives using Tesla’s FSD autonomous driving software. If it seems like an odd mix, it is.
But Tesla is an odd company. There are Corvette clubs and Porche clubs in America, but those are more about a passion for the cars. It isn’t likely that a meeting of Porsche 911 owners will devolve into a deep discussion about the complicated stockholding structure of
Porsche Automobil Holding
(PAH3. Germany),
Porsche
(P911. Germany), and
Volkswagen
(VOW3. Germany).
By contrast, that very subject could be discussed at Takeover 2023. Tesla owners love their cars—Holly will provide a high-performance driving experience for those who want to take their Teslas on a track—but Tesla owners also love the Tesla ecosystem.
“Tesla owners buy the car because they want to save on gas or on the total cost of ownership [or[ they want a performance car that kicks ass,” says Tesla Owners of Silicon Valley Vice President Kelvin Gee.
From there owners start to consider Tesla solar panel, Tesla’s residential battery storage product called Powerwall, and Tesla’s autonomous driving sorftare, he says. Then people say “Oh my gosh, I should buy some stock…I see the future of transportation, the future of renewable energy.”
To some extent, that describes Gee’s journey. He started driving a Nissan Leaf electric vehicle. One benefit for him was EV access to HOV lanes in California. Then Gee moved to a Tesla. Now he’s the club’s president. He isn’t a full-timer though. His day job is at the tech research firm
Forrester Research
(FORR).
The club—often referred to by its acronym TOSV— only has one full-time employee for now, Director of Business Development Stephen Pallotta. “The plan is let’s keep investing in TOSV to grow,” he says. “Through that, we’re [helping] Tesla too and being a voice for them.”
Investors shouldn’t underestimate how loud that voice can be. TOSV has roughly 6,000 members that live mostly in the Bay area. It also has more than 765,000 followers on Twitter/X and more than one million followers across all social-media platforms. Pallotta says.
The club and event, which derives its name because TOSV members “took over” a Tesla charging station in 2021, also illustrate why Tesla has such an ardent following among retail investors.
Roughly two-thirds of Tesla shares available for trading are held by retail shareholders, more than most other big tech companies. About 50% of
Microsoft
(MSFT) stock is held by retail investors.
High retail holdings can lead to several things including more stock volatility and different valuation multiples compared with other firms in the same industry.
How retail ownership impacts Tesla’s valuation multiple is harder to say. Finding comps is hard. Tesla is the most valuable car company on the planet by a factor of roughly three and sells about 60% of all EVs sold in the U.S. That makes it one of a kind.
Retail and institutional investors should be happy with Tesla stock in 2023. Shares are up about 116% year to date, while the
S&P 500
and
Nasdaq Composite
are up 20% and 38%, respectively.
Corrections & Amplifications
Kelvin Gee is the vice president of the Tesla Owners of Silicon Valley. An earlier version of this article said he was its president.
Write to Al Root at [email protected]
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