Tesla’s (NASDAQ:TSLA) start to 2020 has been nothing short of a spectacle. It was only in June 2019 that Tesla’s stock was hovering under $200 with speculation the company was struggling financially. Fast track 7 months and the stock is currently priced at $650.57 USD, quite a remarkable rally that still hasn’t given in underneath itself. The best part is that it is currently happening while the Coronavirus and the US-Iran tension have been suffocating social media and the news. There is genuine confidence in Tesla, as they drive greater production and enter more nations across the globe.
Tesla proving market realists wrong time and time again
I could not count how many times I had seen on social media groups or on finance articles how Tesla was going to come crashing down hard at $250. Once they pushed $250, $350 was very unlikely yet Tesla broke $350 in the next 2 weeks. The most interesting outlier I found while studying Tesla, was that there was a almost-constant positive buy-sell rate. So as someone sold at $400, someone else would buy these shares and ride them to $550. You could look at the stock behaviour as riding a wave. Now, it sounds a lot like a bubble, however in my opinion it was the market catching up with Tesla’s potential. Many people believe Tesla could possibly be the next Amazon (pushing $2000 stock price) in the next 10 years. This is an opportunistic view and I find it hard to see the stock push $1,500 in the space of a few years. In my opinion, 10 years or longer seems more reasonable as many things can still go wrong
Is it stable?
The past two days of trading have staggered at $650, which could mean that the stock will stabilise at $650 or a market correction may push it down to $600 or slightly below. I think most brokers are having a hard time processing which way Tesla will go next, but there is a general consensus that $650 isn’t the highest price the stock could reach. In my opinion, entering Tesla especially holds very strong unsystematic risk. Here’s a theoretical example: Let’s say the coronavirus spreads across China and effects Shanghai. This means Tesla’s powerhouse factory would be closed until the virus passes. This information would affect the stock price, as well as most of the companies that use China as a main source of manufacturing. You must be aware of these theoretical scenarios before entering a volatile stock such as Tesla.
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.
After the earnings report posting some very intriguing numbers, in my opinion this stock could have some very nice potential especially on a longer timeline. It seems to me that everything is falling into place, and the last piece of the puzzle was substantial earnings and expanding operations. My prediction was that the earnings report would have a bullish effect on the Tesla stock price at around $540. However, I did not expect the market to open at $650 as many investors may see the upside potential of holding over the long run. Something to watch!
If you enjoy our articles or are wanting to learn more, you can subscribe to us for free via email and get updates when we post new articles. From all of us at YIG, thank you for the support.
Here is our free, uncomplicated, and extensive ASX portfolio
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 by Tyger Fitzpatrick, founder of YIG.