Tesla stock exploded in 2020 … why it might not have anything to do with its vehicles … your chance to invest in what Luke Lango calls “the next Tesla”

Tesla is more valuable than the next nine largest automakers in the world … combined.

See for yourself …

Source: VisualCapitalist

This chart is slightly dated. As I write Tuesday morning, Tesla’s market cap is even higher, coming in at roughly $825 billion.

To make sure we’re all on the same page, a market cap, or “market capitalization,” is calculated by multiplying the price of a stock by its total number of outstanding shares.

Tesla’s soaring market cap reflects a stock price that has been bid up to extraordinary levels by a legion of loyal Tesla-believers.

To get a sense of just how “extraordinary” this stock price is, let’s look at Tesla’s price-to-earnings ratio (PE).

First, for context, the long-term average PE ratio for the S&P 500 is 15.88.

Today, the S&P’s PE ratio is historically high, coming in at nearly 39.

So, how high is Tesla’s PE?

1,341.

 

Source: MacroTrends

Make sure you understand what this means …

***Hypothetically, if you bought the entirety of Tesla at today’s price, it would take you 1,341 years to generate enough earnings to recoup your investment

Not exactly a value-stock.

Keep in mind, Tesla’s own founder, eccentric entrepreneur, Elon Musk, thought his company’s share price was too high back in May …

In response, investors basically said, “thanks, but we’re not interested in your opinion.”

As you can see below, since Musk’s tweet, shares have soared another 460%.

 

This surge helped Tesla pass a new milestone in early January when it became more valuable than Facebook.

That made it the fifth most valuable company in the U.S., trailing only Apple, Microsoft, Amazon, and Alphabet.

So, what’s behind all of this? Why is an electric car company surging to such stratospheric levels?

Well, what if we’ve been looking at Tesla in the wrong way?

What if Tesla isn’t actually a car company?

***The energy company in a car company’s clothing

Let’s jump straight to our hypergrowth investing expert, Luke Lango:

… Tesla isn’t a car company. It’s an energy company.

Chamath Palihapitiya — an early Facebook exec turned super successful venture capitalist — put it best in a recent CNBC interview:

“The reality is that Tesla is a distributed energy business. They are figuring out how to harness energy, how to store it, and then how to use in a way to allow humans to be productive.

Cars are a manifestation. But solar panels are as well. Power walls are as well … the big disruption that’s coming is to power utilities.

There are trillions of dollars of bonds, of capex, of value sitting inside the energy generation infrastructure of the world that is going to go upside down.”

In a recent update to his Daily 10X Stock Report subscribers, Luke wrote that the world’s legacy energy generation infrastructure — think centralized utility companies pumping tons of electricity to the world’s homes and businesses — it’s going to be completely overhauled in the 2020s.

Replacing it will be an increasingly decentralized electric grid that integrates solar panels, wind farms, hydrogen fuel cells, and power walls.

Ultimately, this will transform homes and offices into their own “energy generation hubs” that produce always-on, completely reliable, and cost-effective clean energy.

Back to Luke:

It’s a multi-trillion-dollar Distributed Energy Revolution — and it all starts right now.

Tesla is at the epicenter of this enormous revolution. This attractive positioning is largely why Tesla stock has taken off like a rocket ship over the past year.

A rocket ship is almost an understatement. Tesla’s total 2020 return came in at 743%.

Now, we won’t argue that Tesla’s stock price isn’t overvalued today, even if we’re redefining what type of company it is. But let’s use Tesla’s story to consider the bigger picture.

What if its valuation is giving us a hint about the growth prospects of this Distributed Energy Revolution?

And what if you could invest in another company that will be a winner in the Distributed Energy Revolution … one that isn’t being talked about today and isn’t trading at such absurd levels … yet one that could turn into the next Tesla, rewarding shareholders in similar jaw-dropping fashion?

Luke thinks you can.

***The AI-powered clean energy storage company of the future

For newer Digest readers, The Daily 10X Stock Report was created last spring for one purpose:

Deliver to your inbox — every day the market is open — a top-notch small-cap stock pick that could rise by 1,000% or more in the long run.

Luke has already led his readers to two 1,000%+ stocks in less than 12 months. Ironically, the first was NIO, an electric car company that Luke referenced as the “Tesla of China.” Readers who acted on Luke’s recommendation back on May 27 are sitting on 1,346% gains.

Today, we’re looking at a stock that Luke has called “the next Tesla.”

Here he is to set the stage:

Arguably the most important component of the Distributed Energy Revolution is energy storage.

That’s because the world’s major sources of clean energy — solar and wind — are intermittent. The sun doesn’t always shine. The wind doesn’t always blow.

So, the key to unlocking the full potential of the Distributed Energy Revolution lies in the ability to store solar and wind energy in batteries for use on a literal “rainy day.”

Luke notes that while Tesla has a stake in the storage game, it’s far from the leader.

For that title, we have to look elsewhere … to a $4 billion energy tech company by the name of Stem, that is going public through a merger with blank-check company Star Peak Energy Transition Corp. (STPK).

Back to Luke:

Stem creates, sells, and installs AI-powered energy storage solutions that are meant to be paired with solar power generation systems at offices.

The secret sauce is Athena, the AI brain behind the storage solutions.

Athena’s job is to leverage granular on-site energy usage and production data to forecast, learn, and optimize energy patterns for each particular battery and for each particular customer. In so doing, Athena is able to programmatically switch between battery power, onsite generation, and grid power, depending on which the AI deems most cost-effective at that point in time.

Luke writes that thanks to massive cost-savings afforded by Athena, Stem has raced out to an early leadership position in the energy storage market.

In 2019, Stem installed 3X the energy storage capacity of its largest competitor in California, which is the largest energy storage market in the U.S. (Stem commands 75% share of California’s total energy storage market.)

But this dominance isn’t limited to the U.S …

Globally, Stem has commissioned more energy storage capacity than any other company since 2014. As Luke writes, “this company has been leading the energy storage market for a while now.”

***But if this industry has the potential to be so profitable, what’s the risk that Stem will be upended by a slew of smaller upstarts?

Back to Luke:

Stem won’t cede its leadership position anytime soon.

That’s because of data.

Stem’s edge is thanks to Athena. Athena is powered by data. The more data Stem has to pump into Athena, the smarter the AI gets, and the more money it saves clients. Athena operates on a shared-data network among all Stem storage solutions — so each new battery Stem installs results in more data for the Athena “brain.”

It’s the AI world’s version of network effects.

To that end, Athena is only going to get smarter, and smarter, and smarter as Stem installs more, and more, and more energy storage solutions — which ultimately means that Stem should actually only extend its leadership position over the next several years.

This is significant.

That’s because the global energy storage market is expected to increase 25X by 2030 and will represent a $1.2 trillion opportunity by 2050.

Meanwhile, as Tesla has a market cap of $825 billion, Stem’s comes in at just $4 billion. In other words, there’s massive room for growth.

I’ll give Luke the final word:

Stem is the unrivaled leader in (the distributed energy) market, with clear visibility and sufficient firepower to sustain market dominance for a lot longer …

Could this one day be a $100+ BILLION company like Tesla?

Absolutely — and that means that if you’re bullish on the Distributed Energy Revolution of the 2020s, you should consider taking a position in Stem stock today.

Have a good evening,

Jeff Remsburg