Thoughts On Tesla

The IPO for Tesla Motors was a resounding success. In fact the most successful thing that Tesla has done so far is the actual IPO. It had been a dead year for IPO's and Investment Banks went "sailor postal" over Elan Musk's concept auto company. Tesla was priced at $17.  It ran up to 32 a few days later and has since dipped back down near its pricing point of 17. But that is neither here nor there. The price of where it was allocated, or the first print, or where it is at this moment is secondary to the fact that this is what Wall Street should be doing. This is the primary function of Wall Street Investment Banks. Its not high frequency trading nor is it complex derivatives creation.

Tesla at its highest had a $3.3B market cap. Give Tesla and its bankers which was led by Goldman great amount of credit. To take an auto company public after what has happened to GM and Chrysler is impressive. Even Tesla haters have to admit that the IPO was a success. The simple fact that a concept car company was able to raise $226MM is quite impressive. This is what Wall Street is supposed to do. Allocate and create capital in the most efficient manner. Regardless of what you may think of Tesla, their IPO was badly needed at this moment only to let the masses know that this is what Investment Banks should be doing on Wall Street.

I actually like this company although I drive a Porsche 911 myself. I have always been into Porsche's since my early youth and most likely drive them the rest of my life. Not withstanding Tesla has something here. If they can streamline their manufacturing, lower the cost of ownership, and stay a float long enough to keep the wolves away, they can find themselves very valuable to a global auto maker. GM is not going anywhere. Ford is not going anywhere. Toyota and Honda are not going anywhere. If Tesla does the right thing they can probably sell themselves to GM in 5-10 years time. This is the best scenario for them. 

Again regardless of what you think of Tesla, it was a great day for capitalism. Regardless of what Tesla's challenges are and there are many it was a reminder of what the true function of  Wall Street is. The allocation and creation of capital is what made our economy what it is today. Program Trading, HFT, Dark Pools, and Co Location even though are viable real business's don't do much for our economy other than make Wall Street rich at the behest of the rest of us.