Fallen: less than 2% Consider buying after: 50%
I feel I’m being generous with Tesla. I’m willing to concede that despite huge losses and a demonstrable penchant for costly nepotism, the company is poised to become an earner in the near-term, and an important company to the American economy in the long-term. For that reason, I give the company a very-rough, ballpark estimated value of $20 billion. As I said, it seems generous to me, and why wouldn’t it be? After all, I’m a self-proclaimed fan of Elon Musk and a believer in green technologies. I was also bullish very early on Tesla, and the call helped me establish my legitimacy in this business. Though I bought TSLA puts at the same time I bought BABA calls, I have since sold both. This call isn’t personal or emotional — quite the opposite.
Still, when a company that should be valued at $20 billion is valued by the market at $60 billion, it becomes extremely likely that it will be valued at $30 billion at some point in the future, and almost surely before it is valued at $120 billion? Wait… $120 billion? Oh, hadn’t you considered that? To double your money in TSLA (and if you want less than a double, wouldn’t you invest instead in something more conservative), the stock price has to rise to $750 per share. It has become so expensive as to wash out the future value of even spectacular present gains.
Chart courtesy of www.stockcharts.com