The idea that Tesla stock is in a bubble is an increasing ideology shared by more investors everyday. On the contrary, the stock price keeps rising proving there is a growing faith in Tesla! So which is it, a short or long buy?
As everyone already knows the arguments as to why Tesla is a buy, I will focus on why it could be a short.
The number one reason people claim Tesla is a huge bubble is due to the fact that the stock price represents mostly what the company could become and not really what it is currently doing. Some investors can't justify a 300$ stock price for a company not generating profit.
The latest aim at Tesla is their announcement of their new vehicle, the Tesla semi. The claim is positive news always outperforms the bad news which is irrational. Wouldn't production problems be more important than a new vehicle being announced since that means there could also be production problems with the new vehicle? The argument is why start something new when you haven't mastered the previous. You can't sign up to an Advanced Algebra class without finishing the Introduction to algebra course.
There is also some concern as to why Tesla needs you to wire them 245 000$ within 10 days of pre-ordering there Roadster model while already having made a 5000$ deposit when the car is scheduled to come out sometime in the near future. I know very specific.
There is also a concern as Tesla is projecting to at minimum double production for consecutive years which bearish investors are not very convinced can happen.
So...
- Stock price is based on speculation and not actual performance
- Production problems
- A sense of urgency in their necessity for cash
- What can be seen as unrealistic production expectations
So is it a buy or a sell?
Is Enron Musk a justified name?
Let me know your opinions below!
@jabez518 nice reading and good article.
Thank you