You're concerned with a 23% YTD return on the stock and a 600% return over 5 years? The market has a way of signaling if a company is totally screwed up. Looks like it isn't.
Well the market can be terribly wrong on many companies in the long run, both undervaluing great companies and overvaluing terrible companies. Tesla's vision is for the next 20 years, not the last 5.
Historical performance is also not an indicator of future performance. Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day. If anything the fantastic return would encourage long term investors so far to partially cash out and diversify their risk a bit.
> Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day
This is a great way to think about holding investments. I remember using this argument to try and convince a family member that they should sell what I considered to be a bad investment. I phrased it as 'If you were forced to sell your shares right now would you use the money from the sale to immediately buy back your shares?'. He responded that no, he wouldn't. Obviously this ignores brokerage fees, but it is a useful thought experiment nonetheless.
Sure, the real world inhabited by the pro's is complicated, but the point is when we're first learning the fundamentals, we assume an idealized frictionless plane.
> Everyday I'm holding onto the shares is the same as if I made the decision to buy that many shares on that day
While I'm not a banker, I find with this method looking at investments highly disagreeable. The price of the stock at the time of purchase is the projected future profits discounted to present day. In other words, it is the fundamental value of the firm, which is invariant of its day-to-day fluctuations.
If you have to be watching for the daily upticks, it's a sign the company is either incompetent or is operating in a highly unfavorable environment.
I don't see how any good can be gained from envisaging a purchase price other than your lock-in price.
Perhaps you're putting too much emphasis on the "every day" part. The key idea of evaluating whether the shares are worth it now and not just when you bought them is important, to me.
> I don't see how any good can be gained from envisaging a purchase price other than your lock-in price.
If I have a thing valued much higher than I believe it is worth, surely the logical thing for me to do is sell and buy something else that is valued lower than I believe it is worth. The price I paid for it is completely irrelevant (except, importantly, when it comes to taxes but this may not be an issue, much less relevant for many in the UK).
TSLA is ~$256. If I only think it would be worth buying at $100, then why would I keep the ones I own? The purchase price is a sunk cost.
If company X's price is currently $100, but it's projected future profits discounted to the present day is $90, then why wouldn't you sell, regardless of the purchase price?
I suppose "the market" was collectively looking the other way for Bear Stearns in January 2007, when it closed on a record high? What was the market signaling about Enron in September 2000, little over a year before it collapsed?
Share prices can be fantastic while a company is horribly, even comically mismanaged. They soar right up until they don't.
That return can only be realized if OP sells. It sounds like OP's intent was to buy shares in a long-term business/vision, not in a stock.
In the long term, markets are a weighing machine, but in the short term, they are a popularity contest.
In August 1998, YHOO traded under $10/share. In December 1999, YHOO traded at > $100/share, a > 1000% return over 16 months. From February 2001 to February 2003, YHOO traded under $10/share. Markets are fickle.
That is because Yahoo got overtaken by Google's superior ad platform and search. Tesla has no obvious viable competitors. It is a premium product that caters to a specific demographic, much like the iPhone in 2007.
Arguably the Model 3 is not a high end luxury car either, not priced at $35k. The Bolt is a direct competitor to the Model 3 with first-mover advantage.
The only argument against that is one has a badge that says "Chevrolet" and the other says "Tesla". If the Model 3 didn't have the Tesla name, no one would think anything of it. It'd just be yet another compact electric car, yawn, who cares, and then they'd buy the Chevrolet.
I'd say that the model 3 is comparable (in price also) to the BMW 320i.
The Chevrolet Bolt is similar in price, but I think somebody making a comparison between a BMW and a Chevy would be similarly mistaken. BMW and Tesla are luxury car manufacturer. Chevrolet isn't.
IMHO, the bolt is overpriced. It's a crossover SUV from a manufacturer that is known for making low cost, high-volume cars. It looks like it is most similar to the Chevy Trax, which starts at $21,000.
The Bolt is GM's first practical EV. If it succeeds, GM could easily choose to compete in the luxury EV market against Tesla.
If GM decided to do this, it would have many advantages over Tesla: a huge dealership and service network, lots of suppliers, easy financing, and all of the other perks you get when you buy a "normal" car from an established company.
Tesla aims to have razor thin margins for the thing that they actually produce. So their lack of dealers who supply an automatic mark-up is something that they cite as a strength, not a weakness.
The thing that Tesla is producing, however, is really expensive to build right now. The cost curves are great for it to come down, but until they do they are in the ironic business of selling expensive things with thin margins.
GM would find it harder than it thinks to compete against Tesla with an equivalent product. Just as Tesla is running into challenges scaling up production.
> So their lack of dealers who supply an automatic mark-up is something that they cite as a strength, not a weakness.
They don't have an automatic mark-up, but car dealers also operate on razor thin margins (the real money is in service and trade ins). However dealers pay their own rent and even spend money advertising. Tesla is on the hook for all of its dealerships, a significant cost that its competitors don't have. In the end I don't think it's such a game changer. It makes sense for Tesla, but doesn't magically make things cheaper.
It also makes it easier to service your car. If you own a Tesla and need warranty service, and you live in middle America, you may have a long drive ahead of you. If you own a Chevy, it's rarely a problem.
The primary threat to Tesla is Tesla's own ability to execute and succeed long term.
Developing a long-term-viable car company is hard even when it makes regular old gasoline cars. Tesla also needs to fulfill the Model 3 preorders, and that process could be derailed by a number of issues: manufacturing speed, quality control, factory problems, etc. That's a big challenge for a company that has made small numbers of high-end luxury cars until now.
I'm impressed by Tesla's success so far, but if I were to invest in a car company today, I would rather invest in GM. They are getting into the electric car market big time with the Bolt, and unlike Tesla, they already have realized economies of scale in car production. If the Bolt succeeds, GM could choose to produce a car that would be a good competitor to the Tesla Model 3.
>Tesla's YTD return more than matches the overall market
What is so significant about YTD?
You can arrange the data in any number of ways to tell a story: A Tesla investment since 2014 has lost money (and been diluted). Go back to 2013 and suddenly it's a goldmine.
Tesla having been a "good purchase" depends on what you paid. But I have a feeling that more people are sitting on a cost basis >$250 than <$100, in which case a TSLA investment has been mediocre.
The market isn't an oracle, and a stock doing well is no guarantee that a company is moving in the right direction. The sentiment is that they're doing well, but only time can prove that.
