The bears are taking the indexes to the woodshed. Their claws are now entrenched in the markets, and we should see the losses return (opinion not advice). However, it seems the tech-heavy NASDAQ is immune to the pandemic and the sharp claws of the grizzlies. You do not have to look any further than Tesla’s (NASDAQ: TSLA)Tesla’s meteoric recovery to see the bulls reign in full force.
Today we will discuss why Tesla reached $1000, their 2020 outlook, and whether the tech giant is worth the investment?
Why did Tesla cross over $1000 ?
It all started when Elon Musk announced in a memo to all Tesla employees, “it is time to go all out and bring the Semi to volume production.” Elon later confirmed the memo was real.
Elon’s memo in full.
“It’s time to go all out and bring the Tesla Semi to volume production. It’s been in limited production so far, which has allowed us to improve many aspects of the design. Production of the battery and powertrain would take place at Giga Nevada, with most of the other work probably occurring in other states. Jerome and I are very excited to work with you to bring this amazing product to market.”
Elon’ announcment caused excitement to stir within Wall Street investors. Mainly, because the truck industry holds huge market potential for Tesla. Not to mention Nikola Tesla stole the spotlight earlier in the week with their truck developments. Thus some investors speculate that Elon’s message showed investors that Tesla is the true King of the mountain in the truck industry. Partially contributing to the sell-off in Nikola over the past few days. Ultimately causing a buying frenzy and pushing the stock to an all-time high of $1000+.
Furthermore, Ron Baron, who holds $1.5 billion Tesla stock, went on CNBC basically said he wants more. To add the cherry on top Ron Baron says he believes TSLA will skyrocket north of $3000. Both statements were extremely bullish. Thus, further adding to the buying spree this week.
Tesla’s 2020 outlook
Tesla’s recovery is relatively reliant on the global supply chain, vehicle manufacturing, and consumer demand return to pre-COVID levels.
Nonetheless, Tesla expects to deliver the Semi-truck, Model Y, and Model 3 in Shanghai by 2021. Also, Tesla factory capacity can exceed 50,000 vehicles for 2020 despite the production problems in March. Earnings projections for 2020 do remain uncertain because of the current climate.
Is Tesla worth the investment?
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.
Should you invest now: no
I think most investors are avid fans of Tesla. Due to its potential to radically change our future for the better. Also, the high volume often allows swing traders to make money, too, benefiting everyone. However, in saying that, most people are long-term investors when it comes to Tesla.
Long term Investment strategy
Considering Tesla just reached an all time high of $1000 (almost tripling from its low in March) I would say it is overextended and due for a slight correction (opinion not advice). Whether Tesla’s correction will come from economic turmoil, a possible second wave, or fear in the market is anyone guess. Setting target prices for Tesla is quite futile. Because coming up with a fair value for Tesla is extremely difficult. Thus, if I were investing in the long-term, I would look to get in off the next sell-off. While long term investing is about getting in an almost not looking at the stock for five years +, wouldn’t you rather get in at a lower price?
Therefore, I would not board the Tesla train at the moment. The momentum is quite quick. Wait for the train to slow down, jump in, and enjoy the ride to capital gains.
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The information above is not 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.
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Written by Patrick McLoughlin, Senior Manager of YIG.