🔌 Is Tesla No More A Conundrum?

Apple hits $3T in market value.

Hey Global Investor! Here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Monday’s Close) 4,796.56 +30.38 (0.64%)

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🔥 Top Movers

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🔌 Tesla: Which Side Is The Tide?

The most shorted stock in stock market history. Stellar returns since IPO. An enigmatic leader at the helm. The most traded stock on Winvesta’s platform. Tesla (TSLA) is Paradox personified. Amidst all of this, it delivered a record number of cars in Q4. Which way is the tide headed? (Tweet This)

Swift Acceleration

In the eleven-and-a-half years as a public company, Tesla has given negative returns on an annual basis only once. When the company was almost out of money in 2013, it was close to signing an $11B deal with Google as more of a bailout, but improved production and sales gave Tesla its first profitable quarter, and the deal took a backseat.

Until then, Tesla was not on the radar of most investors. As of May 2016, the Texas-based EV manufacturer had logged just 0.1B autonomous miles. By October 2019, that figure had jumped exponentially to 1.88B and crossed 3B in April 2020.

Around the same time, the company’s stock price began to take off. Shares were already up ~6X from IPO price, but since April 2020, the stock has risen 10X, despite correcting 15% from its peak in November last year.

Even so, the press has not always been on Tesla’s side, and Elon Musk gave more fodder through his tweets. In 2018, Musk tweeted his intention to take Tesla private at $420 and that he has secured funding for this purpose. Two weeks later, Musk declared that Tesla would remain a public company.

The SEC didn’t take kindly to these statements and sued Musk for false and misleading information that caused damage to investors. While Musk settled with the regulators, he, along with Tesla, was fined $20M each to reimburse investors harmed due to his tweets.

The company manufactured its millionth car in March 2020, and by July, it had become the largest automaker in the world by market cap, surpassing Toyota’s $202B. In the next three months, Tesla’s market cap surged 5X to become the first trillion-dollar global automaker in October.

What Recall?

Musk became the man with the golden tweet. His musings about accepting Bitcoin as legal tender to purchase Tesla EVs moved pretty much every Cryptocurrency to new heights. Then Musk put out a poll asking the public whether he should sell 10% of his stake in the company. 58% said yes, and he has been on a selling spree since then.

This sale was necessitated to pay a tax bill of $11B – the single largest payment for an individual in US history. That apart, he’s been accumulating shares by exercising options to buy 1.6M shares at a strike price of $6.24 per share. If anything, his holding in Tesla has increased to 177M shares from 170.5M shares.

Be that as it may, the company has been having a few product problems and has recalled 675K cars in US and China to fix an increased risk of crashes. The recall impacts 1% of Model 3 vehicles and 14% of the Model S. The recall covers a quarter of Tesla’s total number of cars produced thus far.

This followed another recall from last June when the company had to resolve issues with its assisted driving software in 285K cars in China. The US National Transportation Safety Board also recalled 12K vehicles due to errors in the communication software.

While addressing the product recall, Tesla delivered 308.6K EVs in Q4 2021, a record number! Tesla delivered 936K vehicles for the full year, up 87% from 2020. Analysts had projected the company to deliver 267K vehicles in Q4 and 897K for the full year.

Musk has proclaimed that Tesla’s sales volume would be closer to 20M annually over the next decade. Whether that’s wishful thinking or a well-thought-out plan, only time will tell. What is certain is investors will continue to be glued to his Twitter handle to read the tea leaves of his pronouncements!

Market Reaction
TSLA ended at $1,199.78, up 13.53%.

Company Snapshot 📈

TSLA $1,199.78 +143.00 (13.53%)

Analyst Ratings (40 Analysts) BUY 43%  HOLD 30%  SELL 28%

Newsworthy 📰

Landmark: Apple becomes the first company to hit $3T market value, then slips (AAPL +2.50%)

Closed: US reaches settlement with Airbnb over Cuba sanctions violations (ABNB +3.72%)

Performance: Lockheed Martin beats its F-35 delivery goal for 2021 (LMT -0.30%)

Today’s Market Terminology: Growth Fund

A Growth Fund is a mutual fund that invests primarily in stocks with a history of and future potential for capital gains

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