It’s May 2000, and boo.com, an excessively ambitious fashion internet company that had raised £100 million from an illustrious list of backers, goes bust. That moment was a psychological point, investors seemed to change their minds about tech stocks overnight, and tech stocks crashed. And in the wake of this crash, the wider stock market suffered one of its most severe crashes ever. During the aftermath, raising money for a tech, unless you could find truly visionary investors, as Google did, was nigh on impossible.
Many have warned that we could be seeing a repeat of such times — Amazon has lost 18% in the last six weeks or so, Facebook has lost around 30%, Netflix is down by a quarter since July. Alphabet has seen sharp falls too.
Although Apple has suffered no more than a minor hiccup, shares are down 7% or so over the last week or two, but are still up by around 12% since the end of July.
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Meanwhile, just like in the year 2000, the wider stock market is down. The S&P 500 is down 5% this week, it’s off 9% since the beginning of October.
Woe is the stock market, woe is tech.
Except.
Tesla has come along and done pretty much the opposite of what Boo.com did 18 years ago. Tesla has confounded critics and delighted supporters, turning in a $311 million profit in the latest quarter, with revenue hitting $6.8 billion, double the year-ago level.
Elon Musk, the CEO said: “Normally we’d tell investors to avoid reading too deeply into a single quarter’s numbers, but this quarter really counted at Tesla.”
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This was no midnight Tweet either, Musk boasting at speed, repenting at leisure, his words, appeared in a letter to shareholders, were considered and no doubt vetted by fellow directors.
The company has made a profit before, but in the past, it benefited from tax credits — government subsidies. This time it was a proper business profit, pure and undistorted.
And in one announcement, one-quarter of results, Musk demonstrates that the Tesla revolution is real, not hype and maybe demonstrates that the tech revolution, the fourth industrial revolution, is real, not hype and worthy of investor’s money.
Tesla shares were already up 12% or so in the last few days, they soared in after-hours trading.
Just as the collapse of boo.com was a psychological blow, the Tesla results were a psychological blow too, but this time a powering right hook at tech cynics.
Whether it can single-handedly halt the wider share rout is unclear, it probably can’t, but when they write the history of this time, yesterday’s Tesla moment may be heralded as a key moment in the tale of the fourth industrial revolution.
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