Hello everyone, and welcome back to Investing with Antoaneta. With today’s blog, I’ll be taking yet another look at Tesla. And, yes, I know that I already talk about Tesla a lot, and I’m sure most of you probably know my stance on it by now; there has been some controversy about it recently, so I wanted to show you my perspective.
Just in case you’re new to the platform (or never really looked into Tesla before), here’s a quick rundown of why I like it:
- Tesla is a leader in the EV space (at least for the western markets). Of course, there is certainly competition to be had, especially in Asia. But most western consumers hear “EV”, they’re going to think “Tesla”. Tesla also has the opportunity to work with Hertz, a big car rental company, who want a total of 100 000 vehicles.
- EVs are on the rise. This shouldn’t really be news to anyone. Environmental issues are getting more and more publicity, governments and organisations are working around the clock to raise awareness, and people are looking for safer alternatives. Cleaner energy solutions and EVs are two markets that benefit massively. And, it just so happens that Tesla is involved in both of them.
- Self-Driving tech is becoming more and more popular. This isn’t necessarily related to EVs, but Tesla’s self-driving technology is looking great. It’s still a work in progress, but this has massive potential. If Elon manages to pull it off, it would probably result in a massive revenue stream for the company in the long run. Again, remember that this is an “if” – it’s something for the future. But if anyone can do it, it’s going to be Tesla.
- Solar panels and energy solutions. Speaking of cleaner energy, Tesla is also attempting to “normalise” solar panels and make them more affordable to the average consumer. Now, I know that solar panels aren’t Tesla’s “main thing. But they’re a part of what they offer, so I consider them “icing on the cake.”
- And I remember there used to be a time where you’d be labelled “a bit weird” for even implying that you’d want to use solar energy to power your household. The technology wasn’t nearly as accessible, and the efficacy was considered “questionable” at best. Today, the tech has improved in a big way, and things are generally moving in a better direction. Of course, this isn’t just because Elon Musk walked into the picture.
- Cathie Wood, a growth investor I’ve talked about in the past on this channel, also shares my optimism about Tesla. She believes that there’s a 50% chance they’ll be able to pull off the fully autonomous driving tech within the next five years.
Now, full disclaimer here, I am not an “early adopter”. I only got into this stock three years ago, but I’ve made some very good returns, not like the people who got in on day one. Still, I’ve been able to achieve some significant returns over these years.
I’ve heard back from some of my viewers who invested in Tesla earlier this year (during the March drop), and they’ve already made 70% returns. Those who got in last year enjoyed a 100% increase.
But again, this doesn’t come from a place of “loyalty”. I always advise against this sort of mentality. You’re not married to your stocks. It’s a mutually beneficial business agreement. It’s perfectly reasonable to pull out of your position if it’s no longer profitable.
I like the numbers, I believe in what they’re doing, and I believe in Elon Musk’s ability to lead the business to success. That’s really all there is to it.
Of course, Tesla’s stock can be very volatile. I understand that. There are also many people out there who are worried about Elon Musk’s media presence and how it affects the company. He often makes controversial statements, and there’s a lot of discussion about him online. But here’s the thing – when it comes to Tesla, he knows what he is doing. He understands what the business needs, and he delivers results.
Tesla has always been a controversial topic in the investing community. There have always been naysayers and haters.
“No,” they say, “this company will not succeed”.
“Tesla will crash and burn. It’s just a matter of time!”
“You’re throwing your money away.”
But, in reality, Tesla just keeps getting better and better!
I also believe in the clean energy side of the business. And that’s not just because I’m big of all things eco! We’re at a point where almost everyone understands that we’re faced with an environmental crisis. Most people might not feel “personally” invested in the whole thing, but they are fully aware of the problems.
The demand for EVs keeps going up, and, for me, this whole thing with Hertz is a clear demonstration of this. People are actively seeking safer alternatives, and Tesla is there to deliver.
But, as we all know, Tesla is not limited to just EVs. They’ve also got insurance, batteries and solar panels.
The latest controversy was sparked by Elon’s announcement that he wanted to sell more of his shares. But that’s simply one of the best ways to bring in more funding. If you look at the history of most major publicly traded companies, you will notice that they’ve done this on many occasions.
You need money to make money.
If it didn’t hurt Apple or Amazon, I see no reason to worry about Tesla.
And Hertz being interested in Tesla’s EVs is just one more point in favour of this.
We invest in the brand and the message. Not in Elon Musk’s tweets.
Personally, I believe that Elon is a very competent and intelligent business leader. There’s no way to dispute the massive success he has brought to the company over the years (and the excellent returns for the investors).
So, is now a good time to buy Tesla stock?
You know me, I don’t like telling people if they should or shouldn’t buy a specific stock. Instead, I prefer to list the facts and give my input. So, I’m going to do just that:
Tesla is currently valued highly. At the current share price, Tesla trades at 22 times sales.
Insiders are currently selling. This can be attributed to the recent price increase. After Tesla went over $1 000 last week, board member Ira Ehrenpreis sold more than $200m worth of TSLA shares. Antonio Garcias, an ex-board member, filed a sale of $610m worth of shares. So, insiders clearly share my opinion that the stock is overvalued.
There is competition. Even though Tesla is positioned very strongly in the EV field, their competitors are also hard at work. Porche, GM, Form and Volkswagen are also trying to break into the EV market, and that’s pretty much guaranteed to make a dent in Tesla’s dominance. Keep in mind that, in other fields, the big players (I’m talking 1-trillion-plus companies) hold a massive portion of the market share. Amazon, for example, is sitting at a 40% share in cloud computing. Or, if you want to go into the real extremes, Alphabet (Google) holds over 90% of the global online search market share.
How will the influx of competition affect Tesla? Only time will tell.
Of course, I’m still a huge believer in Tesla. I’m not worried about the future, and I’m not selling out of my position. I just think that $1000 per share is a bit too much to pay in the present circumstances.
And that about wraps it up for today. All in all, I’m still very enthusiastic about Tesla, and still believe that their tech is going to be one of the keys to fixing the environmental issues we face. And that’s what long-term investing is all about – looking at the future.
I hope that you all enjoyed the blog. If you did, please don’t forget to let me know by hitting that thumbs up button and dropping a comment below. You can also check out my previous blog such as “Habits for a happy and successful life“. As always, I’m open to questions and ideas for future blogs, so if you’ve got anything in mind, all you have to do is ask!
If you want to learn more about investing and get access to exclusive blogs, guides and e-books, check out my Private Investing Group.
Thank you all for being with me today, and until next time!
Recommended for further reading:
- Shares Made Simple: A beginner’s guide to the stock market
- Investing Demystified: How to create the best investment portfolio whatever your risk level
- Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future
- The Barefoot Investor: The Only Money Guide You’ll Ever Need
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week