April 8, 2016

Stern buys the Tesla car and the BMW stock

Today, we’re making a different kind of investment. That’s because last week, I placed a reservation for a Tesla Model 3. I’m a big fan of Tesla and I had already placed my first Tesla reservation back in 2010. Unfortunately, I wasn’t able to make use of this reservation because all my family money went into developing Obermatt Stock Search (for the benefit of our customers).

It was more prudent to develop an exciting, new financial research product than buying an exciting new car. That’s why I still own my ‘96 C-Class Mercedes, which still runs perfectly. Let’s hope it lasts until we get our new Model 3.

Being such a big fan of Tesla, should I buy its stock too? I don’t think so. The Obermatt value rank for Tesla is 1, definitely not a stock for long-term investors. As I show in this video, you get a lot more value from BMW, which also makes excellent cars (the Safety Rank is misleadingly low because of BMW’s financing arm). As a matter of fact, in my lifetime, I have only owned cars from Southern Germany. If you want an excellent car, you don’t have to look any further, with the possible exception of California in a few years.

Our value rating of BMW is 90 - a fantastic value for such a great company. You get almost 10 times more value from BMW than from Tesla. Tesla has to do a lot to justify their valuation. Betting on this is fine if you buy their products (at least you can use them). However, buying their shares is another story.

I see some competitive advantage in favor of Tesla (especially in their auto-driving features) but I don’t see any others. I can just as easily imagine BMW with an electric 3 series car in the near future. Especially now that the auto industry has been brutally awakened by the highly deserved success of Tesla.

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