Buy or not buy TSLA

Why Tesla shares are not for private investors

In five trading days, Tesla's $ 136 billion market value vanishes into thin air. This historic loss was preceded by an insane rally - also triggered by small investors. They are now sitting on high losses.

It really shouldn't have surprised anyone. Perhaps the extent, but that a hangover follows every big party at some point is certain, especially on the stock exchange. Even a company like Tesla is not immune to this. Or should it be better said: especially not Tesla?

Elon Musk, the eccentric founder and corporate leader of the e-car pioneer, seems to have perfected what the CEOs of the big tech companies have been doing for years - perfect storytelling. Musk knows how to make Tesla shine, how to convince customers and investors of his company, how to stage a brand and make it something unique.

Course jumps and descents are close together at Tesla

This made Tesla valuable years before the Californians became a serious competitor in the global automotive industry. It may have shoveled the way there in the first place, as Tesla was able to land investor money that others could only dream of. And it attracted customers, created demand for something that hardly anyone wanted to have before. This has repeatedly caused price jumps on the stock market. But also for massive price falls. Anyone who raises expectations in such a way always lays the foundation for a deep fall.

What has always happened on a small scale in recent years has now - this year - happened on a large scale. After all, Tesla is no longer a promising start-up. The Californians have now risen to become the most valuable car manufacturer in the world. Much of what Elon Musk has dreamed of the public in the past has actually become a reality. When it comes to e-cars, you are the technology leader. The Model 3, which was repeatedly hailed as a “savior” and which was supposed to enable Tesla to make the leap into the mass market, is actually selling well and after initial difficulties, production is running smoothly. Tesla was last in the black for four quarters in a row. And that's despite the huge investments Musk is making around the world. It is impossible to imagine where all this will lead once the gigafactorys in China and Germany go into operation, Tesla expands its product range, and the charging infrastructure is improved. And what has to happen when the electric car becomes the standard?

Tesla has arrived on the stock exchange in the broad masses - that carries dangers

Tesla has made a name for itself with its ideas, its brand and, last but not least, the stock market. Together with the tech euphoria in the corona crisis, this catapulted the electric car manufacturer's course into unimagined heights. In the end, the euphoria hardly knew any boundaries, and more and more small investors were investing. True to the motto: Don't miss out on opportunities like those at Apple or Amazon again. By the end of August, the share price had risen by a staggering 500 percent. And that in the middle of one of the biggest economic crises the world has ever seen.

Investors celebrated the mega party. And experienced the mega hangover at the beginning of September. Within five trading days, Tesla lost $ 136 billion in market value as part of a severe correction on the US tech exchange Nasdaq. On Tuesday alone, the price dropped by over 20 percent. In nine days, the price fell by 34 percent.

This was also due to the fact that, contrary to expectations, Tesla was refused entry into the S&P 500. But above all in a rally that in the end lost all traction. This is also clear when you take a look at two key figures. Despite the sharp correction, the Tesla share still has a P / E of 385 and a KCV of 115. And whoever got on board at the beginning of the year still comes up with price gains of 325 percent.

Buying and selling at the wrong time: That happened quickly at Tesla

Many investors who got on board in the summer when the rally was running at high speed are now sitting on heavy losses for the time being. It is quite possible that the record high from August will be reached again in the long term, but maybe it will go a lot further down for now. As a Tesla shareholder, you have to be able to withstand such fluctuations. However, the past teaches us that many private investors are unable to do so. You're buying and selling at the wrong time.

The Tesla share is almost predestined for this. Because the Californian stock story has always been based almost exclusively on expectations. And which of these expectations, when and how will become reality, cannot be predicted. Accordingly, the analysts also disagree. While Independent Research and RBC recommend selling with price targets of 114 and 290 US dollars, the analyst firm Jefferies issued a price target of 2,500 US dollars including a buy vote even before the stock split. The US electric car maker is in areas such as the software used, the battery capacity and production efficiency from the competition, wrote analyst Philippe Houchois. For RBC expert Joseph Spak, on the other hand, the electrical engineering company's papers are "fundamentally overrated". All in all, 23 analysts would currently sell the share, 21 would hold it, and ten would recommend buying it.

You will look in vain for a clear line. Investors can burn their fingers quickly and permanently when gambling with Tesla shares. Sometimes it's not bad at all, you just keep them away in such hot phases.

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11.09.2020 | 08:57