1 big thing: Tesla as synecdoche

Illustration: Sarah Grillo/Axios

Tesla is the company of the moment — the prime exemplar of just about any big and important trend that you might care about.

Why it matters: Almost every reader of this newsletter will have at least one strongly-held opinion about Tesla. What you might not realize is just how widely those opinions range, and the degree to which they map onto much broader views of the world.

Climate

Tesla, especially after its merger with Solar City, sometimes feels like a Utopian project — an attempt to populate a carbon-neutral future with fast, efficient vehicles that don't contribute to global warming.

• Tesla stands to be a primary beneficiary of Joe Biden's economic policy, should it be enacted. Biden has promised to spend $2 trillion over four years on a plan that includes: creating 1 million new jobs in the American auto industry; generating clean, American-made electricity; and investing in battery technology.
• Separately, Biden has pledged to buy "tens of billions of dollars of clean vehicles and products."

U.S. economic policy

Tesla has already benefited from the Fed's zero-interest rate policy following the global financial crisis — a policy designed to incentivize capital-intensive investment.

• Tesla has raised more than $20 billion in debt and equity since inception, almost entirely in years when it was losing money. Easy-money policies made such fundraising possible.
• $465 million of that debt came in the form of a direct loan from the federal government.
• Tax breaks for electric vehicles helped drive many of the company's early sales. Tesla also received tax breaks when building its old and new factories.

The product

Capitalists love and fear natural monopolies. Tesla's flagship product — its cars, powered by its batteries, its home-built software, and its network of charging stations — is years ahead of the competition, and is synonymous with "electric vehicle" for many.

• Tesla has inspired a host of copycats. But so far none of the EV entrepreneurs, nor even the powerful global automakers, has penetrated Tesla's competitive moat.
• That could change as EV adoption approaches a tipping point in the next few years, says Axios' Joann Muller, but for now, Tesla is the undisputed king of EVs.

The one thing Tesla hasn't made, despite many years' worth of promises that it was just around the corner, is a self-driving car. That hasn't stopped the company from advertising a feature called "autopilot."

The billionaire economy

Depending on whom you talk to, Tesla CEO Elon Musk is the archetypal cartoon-villain billionaire — or else he's the archetypal planet-saving billionaire.

• Musk is crude, obnoxious, and worth $70 billion; journalists cross him at their peril. He delights in his status as provocateur, and has never encountered a rule he didn't want to break. All of this makes him very popular among would-be disrupters.

2. From electric vehicle to gambling vehicle

Data: Factset, Yahoo Finance; Chart: Andrew Witherspoon/Axios

For millions of traders and CNBC addicts, the word "Tesla" doesn't mean cars — it means TSLA, one of the wildest large-cap stocks the world has ever seen.

• On Monday alone, Tesla opened $114 higher than its previous close, then gained another $136 within 15 minutes, then dropped by $324 before the market closed. (Even during the drop there was a half-hour period where the stock rose another $100.)
• Each dollar of Tesla's share price corresponds to a market capitalization of $185 million, which means that Tesla lost more than $60 billion of value intraday. That's more than the market cap of Ford and Fiat Chrysler combined.

Large-caps aren't supposed to be this volatile. Tesla's Monday peak was 89% higher than the low point two weeks earlier — on no real news.

• The rise was partly due to small retail investors rushing in, and partly due to short sellers getting squeezed. But ultimately looking for reasons is a fool's errand. (Can a short squeeze really last seven years?)
• The one known known is that Tesla stock is highly volatile. Looking at the implied volatility suggested by options pricing, there's roughly a 15% chance that when the first Axios Capital newsletter arrives in your inbox on Aug. 6, Tesla stock will either be trading below $900 or above $4,000.

By the numbers: Tesla stock is popular among day-traders who don't like to hold any kind of position overnight. Partly as a result, it opened higher than its previous close every day this month up to yesterday.

• If you bought one share of Tesla at the closing price each day in July and sold it immediately at the open the following morning, you would have made more than $450 between July 1 and July 15.*

Don't look to Wall Street analysts for clarity. Their price targets range from $87 (Gordon Johnson of GLJ Research) to $2,322 (Alex Potter of Piper Sandler).

• Coming up: Tesla's second-quarter earnings arrive on July 22. If Musk can manage to eke out a profit, no matter how small, then that will mean four successive quarters of profitability — which in turn means that Tesla will be eligible to join the S&P 500, and index funds with trillions of dollars under management will be forced to buy the stock.

The bottom line: Cars and carmakers have had mythic status for decades. But for the time being it often seems that there's only one game in town.