As noted by Bloomberg Gadfly's Liam Denning, Tesla is merely a company that burns through cash, misses sales targets and wants to acquire SolarCity Corp SCTY, its sister company that "does more of the same." Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
Yet, big oil should be "terrified," Denning suggested — and for one reason.
He expanded that investors are "pouring capital" into Tesla, yet at the same time, investors are asking for their capital back from big oil giants like Exxon Mobil Corporation XOM in the form of dividends.
This is a major problem, as the International Oil Agency believes that the industry as a whole needs to invest $1 trillion every year to meet future demand.
As such, conventional wisdom dictates that investors should want big oil to be big spenders but spending among major oil firms is actually dropping. Meanwhile, Tesla gets a "free pass" from investors who want the company to continue an aggressive pace of spending.
In fact, every time Tesla sells new shares to the public, buyers are stepping up.
Finally, Denning likened Tesla to small shale oil producers in which there are lineups of investors willing to buy their stock despite tumbling oil prices.
"Could Tesla crash eventually?" he asked. "Sure. Will more shale drillers go bust? Undoubtedly. But even if they do, others will pick up where they left off. Enough investors believe electric vehicles and shale drilling promise growth and want to fund it."
"The oil majors just can't say the same," Denning concluded.
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