Tesla is one of the most valuable companies in the world, but it hasn’t been that way for long. In fact, it was only a few years ago that Tesla’s future was uncertain and it seemed to be on the brink of collapse. More recently, public personality problems arising from Elon Musk and slipping revenue could signal a dip that takes them lower than they’ve been in recent years. Let’s take a look at Tesla stock and find out how much it’s worth. Even more, let’s find out what’s going on with the company and see how its future looks.
A Hop, Skip, and a Jump (Off a Cliff)
Tesla’s stock price is currently sitting at $205.74, a nearly 720% increase in value since the start of 2020. Before that, Tesla’s price was pretty stable, fluctuating between $20 and $25 for nearly two years. It wasn’t until late February 2020 that things really started to kick off.
February 2020 marked a REALLY big moment for Tesla. It would take an entire article to cover why Tesla began its ascent, but it boils down to a few things: retail investors, social media (and Elon Musk), and a massive emerging market. Retail investors, simply put, are non-institutional or non-professional investors that trade at much lower values. Individuals with a little extra side cash and those that don’t work for a management firm would count as retail investors. Historically, retail investors have accounted for a very small portion of the overall trading volume, but more recently, they have had a significantly larger impact.
Retail investors flocked to Tesla in 2020, while at the same time billions of dollars in options were placed against the company. When those options expired, retail investors got to “I told you so” at some of the largest firms in the finance world, spurring even more investors to put a little money into the company. When lots of options expire (and lose out), this can cause something known as a “short squeeze”. The total value lost to Tesla shorters was around $40 billion, making it one of the largest short squeezes in recent memory. When all of those options expired, the monumental growth spurt (the hop upwards) began. Tesla was so popular that grandmas and grandchildren were talking about stock movement over the dinner table together.
What caused so many retail investors to put their life savings into Tesla? Two things: social media and the future of electric vehicles (EVs). If Tesla “hopped” in February 2020, it really started skipping up until November 2021. For nearly a year and a half, Tesla skyrocketed to ridiculous heights, hitting all-time highs (ATHs) of over $400 and causing the valuation to clear $1 trillion dollars. During that time, two things happened, the public discourse around climate change reached a head, and Elon Musk was fast becoming one of the most famous people in the world. The easier one to tackle is Musk.
Wielding his Tweeting Scepter, Musk tweeted, memed, and schemed his way into the public eye. Crazy ideas, jokes, and more all came forth from the Mighty Musk, and people ate it up. Musk Apologists of all sorts were created and he could do no wrong. While there is nothing wrong with believing in a leader, especially one that leads a company you have ownership in, people really got into it. It was (is) almost cultlike.
At the same time, Musk, when he wasn’t memeing, was pushing the conversation surrounding climate change and the future of electric vehicles to the forefront. All at once, people realized that we are mere decades away from the widespread adoption of EVs and Tesla was the only real player of note on the field. If you thought the future was going electric and had a few dollars lying around, Tesla seemed like the perfect piggy bank.
All good things must end. In Tesla’s case, however, it could have been worse. After a massive influx of cash and free marketing from every Twitter user and news site in the world, it was time to get down to business. Tesla built innovative Gigafactories all over the world, ramped production at a level never before seen, and started delivering cars at an unprecedented rate. Even more, they expanded their offerings to include solar panels and started producing more batteries than anyone else in the United States.
Still, despite all of this, Tesla was poised for a jump down to something more reasonable. Musk’s fame turned to infamy in some eyes and his seeming instability on social media has created unease in suit and tie investors (where the real money usually is). Additionally, Tesla is a car maker, and production woes began cropping up. All of this, combined with the pullback in consumer spending and rate hikes have caused a bit of wariness in a company that is still getting its legs (wheels) under it. Yes, Tesla has fallen from its great heights at the end of 2021, but so has most everything else.
As it stands, Tesla is valued at $206, around 50% of its 52-wk high back in November 2021. Currently, we think this is a much more reasonable place to be than what it was a year ago. Here’s why:
- As of today, Tesla announced its earnings. For the past four quarters, Tesla has beaten its expected EPS (earnings per share), despite fighting an uphill battle in light of chip shortages and other supply chain issues.
- Additionally, Tesla has only just started to slip in regard to its revenue and has historically beaten predictions by a few percentage points. In a suppressed market with lots of unease, people probably aren’t looking to buy a new luxury electric car. Even still, they delivered over 300,000 of them last quarter, a rather substantial number.
- As long as Musk doesn’t do anything that makes people scared for the future of the company, Tesla is poised to keep scaling, keep growing its profits, and keep delivering cars. It’s still the largest EV maker with the most innovative product/infrastructure in the country. Still, competition is rising, and Tesla needs to keep innovating to avoid being swept away by more established brands entering the space.
- How to Buy ANY Cryptocurrency
- Rivian Stock Price Prediction: 2025. What Will It Be Worth?
- Why Rivian Calls the New EV Tax Credit a “Rug Pull” for USA’s EV Makers
The image featured at the top of this post is ©iStock.com/jetcityimage.