Tesla has taken a nose dive in its share price recently. Is Tesla losing its ability to produce cars, losing market share, or is there some other reason the price is down? We'll discuss below.
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Is This the Bottom For Tesla?
Tesla share price has taken a tumble recently, largely through sales of stock from Elon Musk. The company and its fundamentals are better than ever, so is this the bottom?
Tesla is now below $180 ($540 before the latest split). There isn't much more anyone can do to invest if you've already bought at higher prices and missed out on these discounts. What really matters is how far you are up over time. Still, this is a difficult time for investors when the stock is down around 56% from its all time high.
This can be hard for those involved with Tesla stock and if you let it stress you out, it will. Here's what I would focus on: Tesla is just in a temporary fluctuation in the market and you cannot control that. Tesla still has an exciting future and all signs are pointing to it eventually being the largest company in the world.
When the time comes for Tesla to reach that milestone, it will likely be in the multiple of trillions of dollars. Did Tesla lost its ability to produce vehicles? No it has not. Has Tesla lost market share? Maybe a little bit in China, but nothing warranting this kind of drop. There must be more.
Tesla Fundamentals Still Intact
There may be different things that might be bad news for Tesla, but there hasn't been that. Tesla is still able to make batteries, there is nothing that has been said about future development of batteries and vehicles.
Even a relatively conservative estimate of Tesla's Q4 earnings puts the current stock price at about a price earnings ratio of 24. That's pretty crazy for a company growing at 40 to 50 percent per year. Even if Q1 was the exact same as Q4, with a slight gain, it would further lower this number.
Elon Musk has sold many millions of shares over the last few days. This is the likely cause of the 15 percent stock price drop. Many people wish Elon Musk hadn't bought Twitter. The fundamentals of Tesla are still the same.
The downward effect on Tesla is still difficult. It could all be remedied with a buy back. The price is very low right now and a buy back makes a lot of sense. Auto revenue has increase 146% from $7.6 billion to $18.7 billion dollars. Gross profit has also increase at a similar rate.
Tesla also increased their efficiency as more vehicles are produced. This is a good thing. Tesla's earnings are up about 10 times as much since Tesla was last at this stock price.
This isn't financial advice, but it's fair to say that Tesla is in a good position and the stock price is being suppressed. We just need to ride the storm out.
What do you think about the drop in Tesla share price? Is this all because of Elon Musk selling?
For more information, see this video by Tesla Economist:
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.
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