Is Tesla Stock A Bubble? – Should You Invest In Tesla or Not?
In June 2019, which was a little over a year ago, Tesla’s stock price was around 200 dollars, fast forward to today its floating around1500 dollars. If you had invested just 10 thousand dollars in Tesla last year, you would have made 75K dollars, a 655% increase just in a single year, which was significantly higher than the market average of 28.9 percent.
Some of us did take advantage of this opportunity, but most people didn’t, and since Tesla stock price has been rising faster than falcon 9in the last six months, many are considering whether they should invest in Tesla. There are two sides to this story.
Tesla fans claim that Tesla worth a lot more, and soon it’s going to hit a trillion-dollar valuation, so buying a Tesla stock today for1500 dollars is a good investment because once the company crosses a trillion-dollar mark, that 1500 stock will rise to at least 5K if not more.
And I am not talking about some random fanboys on the internet but respectable investors such as Cathie Woods. On the other side, Tesla critics point out that a car company cant worth that much. In 2019, Tesla sold around 360 thousand cars while Toyota sold 11 million, so it doesn’t make sense for Tesla to worth more than Toyota.
To find out if Tesla stock is a good buy or not, we have to understand a few key concepts. Where Tesla is going to be five years from now? Why is Tesla stock manipulated? And why investing in Tesla now is a terrible mistake?
The Goldmine Tesla Is Trying To Build.
The Goldmine Tesla is trying to build If you ask anyone – what is Tesla? The answer is almost always going to be itis a car company. And that’s true to a certain extend. The company started manufacturing luxury electric cars and slowly shifted to manufacturing affordable electric cars. Elon Musk stated multiple times that the main goal of Tesla is to accelerate the move to sustainable energy to save the planet.
That might have been the initial objective of the company, but as the company kept growing, Tesla changed even though manufacturing cars at the center of its business. Tesla is building an ecosystem. And building cars is simply one of the tools to do that. If that sounds confusing to you.
Look at Apple, it’s the only company that could build a successful ecosystem. Apple is not in the business of producing smartphones or computers, although it might seem like that. What Apple has been trying to do for years to drag more people into its ecosystem.
Once you are there, they can keep selling you different products. And the iPhone is their main tool to trap you. Think about it, once you get an iPhone, you realized the need for AirPods, of course, you can use alternative headphones, but AirPodsare so synchronized with an iPhone that its just more comfortable to get AirPods. Since you already have an iPhone and Airpods, the only smartwatch that makes sense for you to buy is apple watch.
So when you are there thinking about buying your next laptop, you may as well buy a laptop that perfectly synchronizes with your other gadgets. Products are just one side of the story. They can sell your endless number of apps on the AppStore, a music subscription, games, and now they are trying to get everyone to use apple tv. It doesn’t matter what is the next big thing, smart glasses, a little chip that goes into your head or even a smart house, apple can create one and for apple users, it’s much more comfortable to buy it from Apple since it perfectly synchronizes with the rest of their devices.
But how is that related to Tesla? Tesla is trying to do the same thing! The car is simply the product to get you into Tessa’s ecosystem and then sell you a bunch of other products and services. Tesla wants you to charge your car at Tesla superchargers. They want you to buy a wall charger so that you can change your car while you are sleeping. Tesla is as much as energy storage company it a car company. As the world is moving to renewable energy, Tesla is taking advantage of that.
Do you want solar panels? We can replace your roof with our solar panels, and you can directly store that energy into Tesla energy batteries to charge your car. Once the autopilot is complete, Tesla is working on launching a ride-sharing app. When you are not using your car, your car can drive around and generate income, and Tesla is going to take a 30 percent cut.
Tesla cars are equipped with autopilot tools, but they are still at level 2 autonomy. Once they reach level 5 autonomy, they can make it a subscripted-based where drivers will pay a fixed amount every month for the full self-driving experience. Today, you have to drive the car, but when the car will be driving you. You will have plenty of free time. How are you going to use that time? Tesla can start selling games or other entertainment such as Tesla TV to keep you busy while the car is driving you to your destination.
Tesla is working on a voice assistant for its cars. Once you get used to it, instead of buying google assistant or Alexa or Siri, you might as well get the one you use every day when driving your car. It will also perfectly integrate with yourself solar panels and the HVAC system that Tesla is working on. Theoretically, Tesla can keep selling you unlimited products and services. And that’s why some believe that the company will worth trillions of dollars in the future.
Who will stop Tesla?
Who will stop Tesla That sounds great, but we have to be realistic and manage our expectations? Other companies are not dumb, and they perfectly understand where the trend is heading and are also working on similar products. Apple has been interested in creating an applecart since Steve Jobs was alive and as of 2018, the project has over 5000 employees. We don’t know much except that the company is developing both an electric car and self-driving technology.
Of course, apple lacks the experience that tesla has, but Apple already has the ecosystem to drag people into it, and an electric car would perfectly fit into its line of products. Apple is good for outsourcing its products and built a vast network of suppliers around the globe. Theoretically, it can design an attractive car, much like an iPhone, and use its decades of outsourcing experience to manufacture it.
And with over 200 billion dollars in cash in hand and 1.4 billion apple users, it has all the resources to complete with Tesla. Google (waymo) has been working on autonomous driving technology for a decade and has been testing level 4 autonomy. Traditional automakers such as BMW, Mercedes, Toyota, who already have strong brand names and well-established manufacturing facilities can use google self-driving technology exactly like smartphone manufactures are using android.
Will Tesla become a trillion-dollar company? Probably yes, but it’s not going to be easy! Is Tesla stock is a good investment NOW? Not really!
Time to buy Tesla stocks?
Time to buy Tesla stocks? What people often don’t understand is that the company can be really good. It can make amazing products, but the stock price can still be overvalued because they can be manipulated. The fed has reduced interest rates to 0.25percent and flooded the market with almost free loans, which gave companies a lot of liquidity.
Companies can also issue bonds as a method of raising money, but who would buy corporate bonds now, you may wonder? No-one except the fed who has been throwing trillions of dollars into the stock market to prevent it from collapsing. But that can’t last forever.
That’s why it isn’t just Tesla’s stocks that rising dramatically but also almost every other stock. Tesla is also one of the most popular short stocks. This means investors make money when the stock falls. A lot of investors made a bet for the stock to plunge. But, as the stock kept rising, investors had to exist in the market by buying Tesla stock to minimize their losses.
Buying Tesla stock today for 1500 dollars gives you very little room for growth in the next few years. I would rather wait until the bubble bursts and then considering investing in Tesla. If you disagree with me, let me know down in the comments below.