Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
In recent weeks, Tesla have been crushing all expectations as the stock has soared to $524.86 by Monday afternoon (NASDAQ). The recent movements have been very hard to predict as more and more speculators are getting onboard. At $200 in May 2019, many people believed Telsa was overpriced and that it was unlikely to see anymore growth with a downtrend in revenue. This was until Oct 23 2019, when Tesla posted a profitable quarter surprising many investors. This information along with exciting international opportunities rallied the markets to post Tesla into the stratosphere with the stock breaking into the $400 mark. The continual rise has worried some investors that it is becoming a bubble and with an abundance of speculation it may cause a huge decline in the coming days/weeks. The biggest risk is that at such a high price, the risk is much greater than the reward as many speculators will want to cash out as soon as a downfall comes. With no dividend payments is does pose a huge fundamental risk for long terms stakeholders. However, if you got in under $450 well done, you have beat the market!
Why the rally?
Let’s keep it simple
- Profitable Q3 driving investor confidence in it’s long term success
- Opportunity in China with a new $2 billion factory that will manufacture the more affordable Model 3. This will make the electric car accessible to the everyday person.
- Now worth $93 billion in market cap, it is bigger than Ford and GM ; two giants in the automotive industry.
- 50% increase in output (electric cars) in 2019
- Speccies – speculators trying to grab onto a quick profit as Tesla’s stock price increases. A very risky move. Not so much a cause but a result of the rally.
Early birds are now very rich
At IPO Tesla’s share price was $17, and climbed to $19.70 in it’s first days of trading. If you bought Tesla at this price I have no doubt you’d be already sorting out your retirement (assuming you haven’t sold yet). After speaking with some people who had invested with Tesla, it seems as though many had sold between $200-350 as the share price seemed to have reached it’s ceiling. Now, if you had bought 2353 shares at $17 totalling to $40k exactly – you would now be sitting on roughly $1,232,972 USD. Not bad right…. Even investing $40,000 late last year at $350, would have made you an extra $20,000 including brokering fees. It is quite remarkable how the market will always find a way to surprise even the most experienced investors. In this case, the risk has definitely reaped it’s rewards for investors brave enough.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written Tyger Fitzpatrick, founder of YIG.