Tesla (TSLA) at $260: what it means

Yesterday, TSLA shares touched $260 early in the day.  That’s the latest high for a stock that has gained 30% since mid-December, a period during which the S&P advanced by 1.8%.

What does this mean?

–On a personal note, it means I don’t own any more TSLA.  Regular readers might reall that one of my sons and I have been trading TSLA between $180-$200 and $250-$260 for the past couple of years.  I had sold some at $250 this time around and placed a limit order for the remainder at $260 about a week ago.  Yesterday, the stock touched $260.00 for a brief period before falling back to close at $257.48.  (An aside:  I find it strange that the stock peaked at such a round number.  I presume this means there’s a lot of stock on traders’ books waiting to be sold in mechanical fashion–meaning with no attempt to entice buyers higher–at $260.)

–The main message, though, is that there’s a lot more going on in the US stock market than the post-election Trump rally–which seems to me to have already exhausted itself anyway.

I’m driving a Kia Sorrento these days, after my Hyundai Veracruz gave up the ghost late last year.  I can imagine my next car being a Tesla.  Nevertheless, TSLA is to my mind the ultimate concept stock.   Yes, the merger with SolarCity is behind it and the death of a driver using the Tesla self-driving feature seems to have been operator error rather than a flaw in the car.  Those are plusses.  On the other hand, the company is still struggling with cash flow breakeven.  And the Wall Street consensus, for what that’s worth, is that it will lose $1 a share in 2017.  So finances continue to be a serious risk.  To my mind, the rally is all about the hoped-for success of the Gigafactory, Musk’s reimagining the car manufacturing process, and the triumph of software over hardware and batteries over fossil fuel.  TSLA’s gains are a testimony to the rude health of the stock market, with or without a Trump tailwind.

–Areas of interest other than aspirational tech or hoped-for tax reform and infrastructure spending?   What about Millennials worldwide?  economic strength in the EU?  regular old tech?  Mexico??  (I haven’t held Mexican stocks for over twenty years, although I’ve had exposure from time to time to that economy through multinationals.  I think it’s too early to make a major commitment, but not too soon to be fact-finding.)




4 responses

  1. I think you’re wrong on this one. I doubt Tesla will ever make significant money. Solar city is the same (without subsidies), and Tesla buying Solar City was like Sears buying Kmart. We’ll see a bankruptcy within a few years, particularly since we don’t have the White House and Congress propping green energy up. And don’t forget that those batteries (that have caused such an environmental disaster in China) are charged from the grid, which means if you drive a Tesla you’re driving on coal.

  2. Thanks for your comment. It looks like I didn’t make myself so clear in my post.
    I see TSLA at present as mostly a dream and a hope. It may end up like Amazon, which lost money for eight years before it figured out a money-making business to be in; or it may wind up like EuroDisney, where investors began to realize as the park opened to disappointing sales that it rained too much there and locals weren’t that interested in Mickey Mouse anyway.
    What I wanted to say was that concept stock perform best when investors are feeling bullish. So the strong showing of TSLA recently, despite increasing competition, disappointing production figures and a new administration emphasizing fossil fuels shows a bullish undertone to Wall Street.

  3. I guess also I’m a long-term investor, so I may miss a good momentum play because I don’t see long term growth. You’re right that sometimes you can do well when a stock is rising even though there is no real good reason for it to be rising.

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