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The Temptation of Tesla

The problem with being on the top of the heap is that there are always an army of challengers trying to push you off. In the case of electric cars, no one is flying higher than Elon Musk and Tesla. For years, many have decried the stock as over-valued, and who knows? Maybe it is. But after toiling away for years, the company seems to have its stride and worked out many of the complicated headwinds it has been facing. Here’s a fact that still blows my mind. Tesla is now the highest valued automaker on the planet. That’s not an endorsement, just an observation.

However, what I find more interesting isn’t that Tesla has turned a corner (maybe), it’s that some very interesting challengers have begun to gain momentum, perhaps most notably NIO, the Chinese company whose product offerings and speed to market are seemingly poised to challenge Tesla’s ascension in the electric vehicle category. In typical form, they are moving farther, faster than may other challengers due to efficiencies gained by learning from the first mover and employing their best practices. When one’s R&D is done for them, all they have to worry about is growing as quickly as possible.

This isn’t meant to be a debate or a prediction of which company will win, but more of a question about how to research a fast-growing category with an exploding number of new entrants. It’s anyone’s guess how new challengers will fare, or even how Tesla will. But one thing seems for sure, electric vehicles are here to stay and the companies who do the best job of managing costs, supply chain and distribution will write the future.

As I think about how to structure our free share giveaways, my train of thought goes like this. What are stocks I can reward our customers with that will make them ask better questions while considering what to purchase for their portfolio? How can I encourage them to not just research a hot stock, but to consider the entire category they are watching and understand how success and failures have as much to do with challengers as leaders? Both are complicated questions to answer, but nothing guides an investment better than sound research and disciplined due diligence.

Buying the momentum of a company like Tesla seems to me like the easier choice and watching its meteoric stock price would seem to make it an interesting investment. But who’s nipping at its heels? Who might be the surprise challenger to take-off next? As anyone who’s watched a high-growth category knows, shifts in the landscape happen quickly and sometimes unexpectedly.

That’s why, for a limited time, we’re offering a free share of Tesla or Nio to anyone who adds at least a net-new $1,000 to their account (further details here). I hope doing this widens the aperture of how you think about not just an investment in a stock, but an investment in an entire category. If you think it’s trending upwards, consider all the players and maybe make several different investments, rather than just one.