Tesla - The share you should never sell, or should you?
We hear all the talk about the future being electric and reducing emissions that we produce in order to save what remains of our planet. But, what’s the reality of this technology coming into fruition? More importantly, how can we cash in on this? This article presents facts whether it is worth adding Tesla to your portfolio now or is it worth waiting, or not worth investing at all.
Compared to 2010 when Tesla began to float on the Nasdaq Stock Exchange at a measly $17 per share, we can see a substantial increase in price over the past 9 years with price now floating at the $268 range currently. The motor brand has attempted and succeeded in easing any doubts investors have had by gradually improving the efficiency of their batteries which was initially their biggest issue.
Anyway, here are some of the nitty gritty facts from the end of Q4 2018:
- Tesla Motor's revenue increased by 5.88% to $7.23B
- Net income decreasing 17.51% to $210.08M
- Net assets increased by 7.86% and Earnings per share decreased from 1.75 to 0.78
In addition to this, just a month ago, quarterly deliveries posted a sharp decline of 2.7% just this month and an 18.2% drop in 2019.
So, is Tesla making it to your portfolio?
Ethics Vs. Dividends
Well, Tesla’s decision to not pay dividends might make it less appealing to those investors seeking an income, however, by reinvesting earnings into new products and services, it may appeal to growth investors as well as those investors conscious of creating a sustainable environment. Tesla’s vision of a sustainable transport system will appeal to those actively working to save the environment we live in! Other tech firms including Google also choose to not provide dividends but rather re-invest within the business to increase growth and share value, allowing the shareholder to still sell their shares later and still make a profit.
The main drivers contributing to an increase in Tesla share price are the growing public demands for electric cars. As commuters become more comfortable with the concept of electric vehicles, the firm’s sales continue to climb. Given that it specialises in sustainable transportation, Tesla appears perfectly placed to take advantage of this trend. The hare and tortoise approach Tesla portray also entices investors; spending years developing their flagship models suggests they pay attention to detail rather than rush products to market.
However, Tesla has frequently posted losses, despite impressive sales figures. With the group rarely turning a profit, investors may start to question the company’s strategy if it continues along this path. The ongoing lack of a dividend might also dampen enthusiasm for shareholders in the long run. We also notice the statistics of the products Tesla produce, in terms of performance, petrol heads have found a substitute to gas guzzling V12’s in which we see that the speed and efficiency of the electric motor vehicles are not hindered in the slightest!
Leadership also keeps investors clued on. Tesla chief executive, Elon Musk, is a high-profile entrepreneur whose ability to express the company’s vision of the future has long attracted investors. With his interests ranging from driverless cars to space travel, he’s kept Tesla firmly in the public eye.
Buying and selling Tesla shares
How do you get involved with the buying and selling of shares? Tesla shares trade on the Nasdaq in the US – a stock exchange that traditionally focuses on technology companies. Its shares trade under the ticker symbol ‘TSLA’. Tesla doesn’t run a direct stock purchase programme, but investors can still buy shares in it through brokerage firms.
12/30 of analysts at the Instinet group consider the shares a buy, whilst 11/30 suggesting the shares are a sell and the final 7 believe the stock is a hold. Average price targets hold around the $320 region down from $340 as of the end of February. With that in mind, this is nearly 37% above the closing price of last week ($235). Very mixed views considering Tesla has been existent on the exchange for nearly 10 years.
The fear of technology overtaking the power of the human labour force is also something worth considering, with many people sceptical concerning the longevity of the products Tesla produce due to the infancy of the market. However, Tesla is here to stay by the looks of it, with ventures into manufacturing the Solar Roof, Powerwall and as Elon tweeted earlier this week, even a ‘quiet, electric leaf blower’. These enable homeowners, businesses, and utilities to manage renewable energy generation, storage, and consumption.
Tesla is at the forefront of the future with some major breakthroughs in the technological world. If anything, they are to be considered the pioneers of the electric car who mass produce low priced fully electric vehicles, something which has never occurred successfully within the automotive industry and they sure aren’t looking to stop with the innovation anytime soon.
Investing at today's price of $235 and selling your shares at the short term projected price of $300 could give you an average gain of nearly 28% which is not such a bad investment, however, If you are looking to hold onto your shares for the longer term, Tesla has some large plans which could boost share price within the coming decade.
Comment below if you would buy or sell Tesla's shares!...