An Overview of Tesla’s Stock Performance

About a year ago (March 2019), Tesla’s stocks suffered a great decline due to the launch of its new model as of then. It made many investors wonder if that was the right decision for Tesla—launching a new model despite its financial instability at the time. As of March 2019, Tesla’s stocks were down to $285 per share. Today, the story is quite different as Tesla’s stocks are up to $518 (as of 16 January 2020); only a few days ago its stocks were up to $524.86. If Tesla’s stock eventually gets to $554.81, it would finally hit a market cap of $100 billion. Its market cap currently sits at $94.6 billion making it worth more than GM and Ford combined. The price may fluctuate within the $500 range, but what most investors and speculators would like to know is how exactly did Tesla’s stocks go above $500—60% in 90 days.

Tesla’s stock price has indeed gone up in a short period of time. Only a few days ago Tesla’s stock price went up to $469.06 with a market value of $85 billion, and by January 10, before trading closed Tesla’s stock price was up $476. By Monday morning, it was worth an extra $50. So, what really happened? 

Predicted Price Target

Some experts have come to a conclusion about Tesla’s sudden stock price rise; one of which is the undeniable fact that Tesla is more daring at taking risks and trying new inventions compared to some of its industry experts. Regardless of its shortcomings over time, the company keeps pushing at its goals. As a result of this, Tesla’s daring stakeholders and investors stay positive in the company. An instance of this can be seen in Colin Rusch’s $385 to $612 price target on Tesla. 

Unlike most Wall Street’s Tesla skeptics, quite a few analysts and speculators saw the possibility of Tesla’s stock price increasing. A leading tobacco analyst for Bernstein, Gary Black was one of the analysts who saw Tesla’s stock price possibility. In December 2019, Black stated that Tesla stock which was worth $400 as of then, had a possibility of doubling. He is also of the opinion that Tesla’s net income could hit $5 billion by 2024 and by 2029, $15 billion. He also believes that Tesla’s share earnings could get up to $10 per share in 2020, and $27 by 2024. At Black’s estimations, he expects that Tesla stocks could hit $800 per share by 2024.

China Market Invasion

Another factor that could have influenced the sudden “pop” of Tesla’s stocks is its China invasion. In January 2019, Tesla made it known that it would build a factory in Shanghai worth $2 billion as a means of producing more of its Model 3 at an affordable rate. The Shanghai factory was going to be a win-win situation for both the company and its host country as it would give the Chinese an opportunity to purchase and own American electric cars at affordable rates. It was reported that the new Shanghai factory manufactured over 1,000 vehicles weekly, and by the end of 2019, the company began delivering its Model 3 sedan to the Chinese market.

Third Quarter Profits

By the end of the 2019 third quarter, Tesla revealed a surprise profit which took its shares 20% higher. The Q3 profit was indeed a surprise as it wasn’t what most Wall Street investors were expecting. There was an expectation of at least a 46 percent loss on Tesla’s stocks as the company reported a net income of $1.91 per share at the close of Wednesday. Tesla’s shares closed at $254 only to surge to $306 (over 20 percent) in late trading. The Q3 surge greatly contributes to its current 60% stock jumping in the last 90 days.

The CyberTruck Saga

CyberTruck was one of Tesla’s big risks which turned out to be a profitable one. In November 2019, Tesla’s controversial Cybertruck was launched, an event that turned out to be quite daunting as the model wasn’t well-received by the public initially. However, a few days after its launch, it received a record-smashing preorder which exceeded its 250,000 mark. The preorder price was placed at a refundable $100 which made a great headline. Headlines are not only good for a company’s reputation but also has a way of influencing the company’s stock or the entire market—in this case, positive influence for value increase.

Elon Musk’s Influence on Tesla

Elon Musk, co-founder and CEO of Tesla can be said to be the brain behind the company’s innovations and new inventions as the CTO (chief technology officer) of the company. Since its inception until now, Tesla is committed to accelerating “the world’s transition to a sustainable energy future.” It has since stayed true to its vision. 

Musk has served as Tesla’s CEO for over 14 years. Under his leadership, the company has experienced some serious shortcomings and drawbacks, nonetheless, made a massive increase and innovations over the years. Musk who is also the founder of the SpaceX program is more technology-driven compared to making record-smashing financial returns. This can be seen in his technology interest for new models even in the middle of a serious financial downturn. 

“If you go back a few hundred years, what we take for granted today would seem like magic—being able to talk to people over long distances, to transmit images, flying, accessing vast amounts of data like an oracle. These are all things that would have been considered magic a few hundred years ago”. – Elon Musk

Through his CyberTruck and SpaceX projects, Musk is committed to providing mankind with a technology-driven future that many only imagine. The idea of teleporting or having flying cars may be a little farfetched, but parts of these absurd ideas are gradually becoming a reality. Take, for example, Tesla’s CyberTruck literally looks like something that should be driven on the internet, like a cyber-road or something!

Part of Musk’s influence on Tesla is keeping it true to its vision of creating top-notch electric cars using sustainable energy, thereby, laying off crude fuels. All Tesla’s vehicles are unlike regular vehicle that uses gas, they run completely without gas. Tesla may not be the first to have a go at electric vehicles (EV), but its unending innovations and new inventions have made it impossible for competitors to keep up. It not only beats the industry by innovations and inventions but also beats the market by an ever-increasing market cap. Though some decisions made by Musk’s and the Tesla board may have negatively affected the company’s stock and overall market cap over time, one strategy that keeps Tesla at the top of its game is creating electric vehicles that everyone could afford. This strategy was Musk’s personal goal while creating Tesla Motors. Tesla’s vehicles have a starting price of $35,000, $39,000, $70,000, and $80,000 respectively for its models

If Tesla is able to hit its $100 billion market cap and is able to stay there, alongside meeting other revenue goals, Musk will “get the first of 12 tranches of stock options.” If at all the price stabilizes, the stock options would be worth $364 million. Musk was given the right to earn options as a form of compensation by Tesla’s board and shareholders in 2018. The options have the potential of going over $55.6 billion in the next ten years. For Tesla to hit the $100 billion mark, its market cap must worth far above $100 billion and must remain there for an average of 30 days (first condition) and six months (second condition). In the case of fluctuations and the price dropping, the $100 billion cap would take no effect until it meets the 30-day and six months trailing average. Another condition is that the company must meet its annual revenue or EBITDA goals in due time. If all these conditions are met, Musk’s stands a chance to earn his first tranche.

Tesla Stock Performance: Source barchart

Tesla Stock Performance: Source barchart

Past 5 Days

Date Open High Low Last Change %Chg Volume

01/15/20 529.76 537.84 516.79 518.50 -19.42 -3.61% 17,368,801

01/14/20 541.00 547.41 524.90 537.92 +13.06 +2.49% 29,061,299

01/13/20 493.50 525.63 492.00 524.86 +46.71 +9.77% 26,634,502 

01/10/20 481.79 484.94 473.70 478.15 -3.19 -0.66% 12,976,800

01/09/20 497.10 498.80 472.87 481.34 -10.80 -2.19% 28,463,100

Conclusion

The performance of Tesla’s shares portrays a new high point for the company with its current market cap. The Tesla brand is fast dominating the EV line with little or no competition from their competitors. Taking production to China where the competition for electric cars is quite high, hopefully, Musk has a new trick up his sleeve to dominate the China EV market. In spite of its losses history, one thing Tesla hasn’t stopped doing is impressing its investors with its numbers. Its initial target delivery target was 150,000 vehicles annually, but in 2019 alone its fourth-quarter delivery was 112,000 vehicles adding to the other three quarters making it a total of 367,500 vehicle delivery in 2019—doubling the 2018 delivery numbers. With this a few investors still stay hopeful for Tesla to increase in value—above the $100 billion mark.