If you’ve been following Tesla stock, you would observe this has probably been one of the best stocks this year, especially among top car companies. As of today, there has been a 10% fall in Tesla stock. What the stock would end up today is not known. A lovely month to you out there as I welcome you all to my blog. If you enjoy this blog, please encourage me by liking, commenting, and sharing this post. Subscribing to this channel will also mean a lot. If you want to get into the stock investment game, watch my video ‘The beginners guide to stock investment 2020‘.
Certainly, many investors that recently added this stock to their portfolio would already be thinking to add more of it. The question now is, why is Tesla stock crashing? Is this a sign that holders of the stock should sell it? Today I will be sharing my opinion. Please remember that everything I say here is my opinion and not law, so don’t be tied to it. Also, all figures noted here are accurate for the 3rd of September.
Observations in the Tesla Stock
From March 2020, we could see from Tesla stock that it has been performing greatly. Two things are observed in the Tesla stock. The first observation is that we have been so stressed about this stock. But sooner or later, it will revolve back down to its moving averages. This is a healthy sign that the stock would move up.
This is also an indication that there is a pullback around the corner. Does this imply that it would crash down to $200 per share with the 200 moving averages? There is every likelihood, but pulling back to the mid 300 is possible. However, in the long-term, this would make it a healthy stock.
Secondly, I noticed that Tesla had been overboard, which makes it unsustainable. From the charts, it is pretty clear that it is time for some pullbacks or selling of Tesla stock. Regardless of how great the company’s outlook looks in the next 5 to 10 years or tweets from investors keep flowing, it seems it’s time to begin some selling of the stock.
Why you should hold your Tesla stock
With this being the recent concern from investors, the stock certainly fluctuates in the form of waves. No stock jumps from the region of 0 to 1000. It’s pertinent to know that there are times it goes up; there are times it comes down. Every stock, including the bestselling at the moment, experiences this. If you’re purchasing the Tesla stock for nearly $500 per share post-split, it should be overwhelming to purchase the stock for about $400 per share.
If you’re buying for a longer-term, maybe 10 to 15 years, this seems to be a better opportunity to add more to your portfolio. Every long-term investor wants to buy when the stock is low when people cast several doubts about the possible continual fall of a stock. This doesn’t mean you should purchase the Tesla stock right now, and at the same time, you should not see it as the right time to sell off since there’s a crash.
If your decision to sell it today is based on the fact that the stock moved lower, you need to exercise more patience. You need more time to study the business to make your decision about buying and selling.
Tesla made an announcement this week about the decision to sell up to $5 billion in stock amid its incredible rally. This is one of the biggest sell-offs that has been witnessed in Tesla for a very long time. Tesla also indicated that there would be sales of additional shares from time-to-time and at-the-market prices.
Tesla has decided to use its net proceeds, if there would be any, from this offering to strengthen its balance sheet further and the benefits of general corporate.
Tesla’s Last Earnings
Tesla holds $8.6 billion in with an additional $5 billion, which sums $13 billion in cash and cash equivalent. Tesla might be keeping this cash as a buffer in the balance sheet should hard times set in. This will help them to continue the smooth running of the business.
With Tesla’s current financial status, they seem to be very okay now compared to what they have experienced in the past, and it doesn’t look like they will have any tough time. However, it would be good to sell some stock here to raise more cash. Tesla has over $400 billion in market cap.
Despite the shortfall in stock price, things will certainly go back to normal, especially for long-term investors. Let me know your opinion by commenting. Encourage me by liking and sharing this post with others. Also, subscribe to this channel if you enjoyed the post.
Recommended books for further reading:
- Rich Dad’s Guide to Investing
- Shares Made Simple: A beginner’s guide to the stock market
- Smarter Investing: Simpler Decisions for Better Results
- The Warren Buffett Way
- Warren Buffett and the Interpretation of Financial Statements
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