We published an article this morning providing a detailed breakdown of the Sohn Investment Conference presentation made by Social Capital CEO Chamath Palihapitiya earlier this month, during which he pitched Tesla Inc (NASDAQ:TSLA) 2022 convertible bonds as an investment opportunity with limited downside risk and huge upside potential. What were the results of our analysis? Well, you’ll just have to read that article to find out.
As we didn’t have room to analyze the bulk of Chamath’s presentation, we wanted to share a full transcript of it with our readers as supplemental material to that article, so they can better understand his own motivations for betting on Tesla Inc (NASDAQ:TSLA). The presentation was transcribed by Insider Monkey using an audio recording of the event. It should be noted that the audio quality was not the best and that several sections of the transcript are missing words which were either drowned out by other noises or were otherwise muffled.
The transcript of the presentation, which was viewed by many as one of the highlights of this year’s Sohn Investment Conference, is a must-read for anyone interested in Tesla Inc (NASDAQ:TSLA) as an investment and particularly for those curious about these 2022 convertible bonds. Check it out below.
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Social Capital CEO Chamath Palihapitiya: Before I begin, obviously let me just thank the Sohn Foundation for allowing me to be here. I don’t know with all of you, but for me, as a father with young children, just seeing that family just touches a nerve about how important it is that when people get sick that there are other people around who are doing the right thing to support you.
So let me begin the same way that I started last year at Sohn, with a talk about how we think. At Social Capital, we invest billions of dollars and make investments at very early stages all the way through the public markets, in companies and entrepreneurs that we believe are solving some of the most interesting and important issues at the time. Whether that’s building the next generation’s silicone machine learning or using software to cure diseases like diabetes and cancer, or inventing rocketry. And the reason we come to that strategy is through the people that work at our organization. The partnership [indecipherable] pride have some of the most well-known and talented technologists and entrepreneurs who spent their lifetime before they’ve come to work with us, building many of the great products that all of you have used and grown to love. As [unintelligible name] said, it was from that land that we presented to you last year, a company that we believe is a multi-trillion dollar monopoly, hiding in plain sight. The business set was fundamentally misunderstood because it started from a model [unknown] perspective. It’s like what he said, was when you start from a broad technology perspective, what you see is a monolithic organization being built. A multi-trillion dollar business in retail, a multi-trillion dollar business in opportunity with infrastructure, and probably one of the single best jobs of capital allocation that we’re seeing being done in anything. What’s great is it’s working, we still continue to believe that this is one of the most interesting companies in the world, and it’s something that we think that we made one of our most fundamental high-conviction [garbled].
Now, let’s talk about something else. Amazon I think at this point is non-controversial. It is a business that all of us would believe basically has the best days ahead of it. But there’s another company that’s equally vulnerable, which half of you in this room probably believe is one of the most interesting companies in the world, and the other half would believe would be something that is probably something close to either a fraud or a bank. What’s interesting about controversy is that controversy really comprises of three really important things. There’s always good, there’s generally some bad, and then in this case, there’s also some ugly. The company we’re talking about today is Tesla.
Now let’s start with the good. The good is unbelievably good. Because at the end of the day, no prepped business can ever be built in the absence of fundamental consumer demand, and the intent in Tesla is undeniable. In four years from launching a luxury sedan business, they’ve now captured a third of the entire market. In four quarters of launching the luxury SUV business, they’ve captured 10% of that market. And just by simply announcing the long-term availability of a mid-priced sedan, they’ve generated 400,000 deposits, which on a look-through basis is equivalent to 16 billion dollars of sales. And what has been incredible for Tesla has been equally horrible for their competitors. BMW 3 Series demand literally fell off the cliff in the face of their model, and a 25% reduction in unit sales.
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