Tesla [TSLA] Stressing me out


Cars

Published on September 10, 2020 |
By Frugal Mogul

September 10, 2020 by Frugal mogul


Note: Nothing below is investment advice.

At the end of the day on 8 September, I checked my phone and found out that my stock portfolio was the largest single day in my entire life. My value on paper was less than five figures, larger than any one-day decline I had experienced even at the onset of the epidemic.

Prior to this point, even though I had invested in the stock market for over 20 years, I have generally focused my investments on incredibly stable companies that were focused on regular, large dividends, and less on growth . I made and learned some incredibly bad early choices during the dotcom bubble – but being so early in my life, I was splurging money together to save as I worked in minimum-wage jobs in high-school I didn’t have much money to invest which could have been lost.

Monday, September 8, however, was a five-figure paper loss, and I questioned myself on my investment.

One aspect on investment advice

Before proceeding, I think commentators have an interesting following on my articles recently. After my last article, I mentioned someone I really should add an explicit disclaimer – I think one was not enough at the top and bottom of that article, so why not add another mention?…

Let’s be clear. If you are an investor, or are thinking of investing, and you come and read an article on any website and then put all your money into a single investment, you’re doing it wrong. I am actually teaching this now to my 10-year-old son, who has decided that he wants to start investing. His method is for Google things, like “the best stock to buy today”, before telling me that someone has $ 1.77 of stock that can climb 311%, and can he buy that company?

And, seriously, if you’re Google, you’ll find the exact company. As I have stated earlier, the question is, what can be the goal of writing such an article? If you dig into the company that is being advertised, we find that the $ 1.77 stock has lost about 25% by that point, so the drive for investment is not working. So, why would they be doing this?

If this is not clear, I am not referring to the company because I do not want to give them any credibility. But any discerning reader should ask the same question of every site they read that contains information about shares. In theory, I can only be a puppet (I obviously am No A fake puppet) trying to sell the price of my shares and dump them.

In general, if you are a smart investor, and you want to invest in a particular company, then you should actively seek both positives. And negative Approach and weigh them.

Actually, when I proposed writing CleanTechnica, I was already doing all of this research, diving into FUD articles and trying to determine the forest through the trees. I expected to like things about that Tesla, and things I didn’t get. In fact, I wrote an article about that, and I was surprised to find that I had no support for negative thoughts. Your mileage may vary, and you should not read a single article in its entirety, so that you get the right investment advice. If you are doing this, then you are doing it wrong.

What has changed about Tesla?

By that way, let’s go to Tesla. In late March, I wrote an article about how I valued Tesla (or any company) that was influenced by COVID-19, and I specifically outlined eight points that I wanted to make to decide Use whether I am going to invest in businesses or not.

Before I look at my idea of ​​Tesla today, I wanted to point out that this is literally what I do for every company. A lot of analysts who are worried about Tesla prefer to compare the level of support and wedges in the industry’s P / E, or stock charts, or … lots of different things. With my initial investments, I came to know that if a company has a premium, people think that the industry it works in will have a premium for as long as it executes. Conversely, if the company is in severe trouble then there will be no stock chart level of support. By all means, feel free to disagree and create your own system, but it’s worked really well for me for the last 20 years, ever since the dotcom bubble took me a step back And figured out what I was doing.

Let’s examine these points:

Company lead

Elon Musk may be polarizing to the general public, but his drive and determination have clearly established an environment of innovation and advancement within the engineering teams at Tesla, and the rest of the management team smooths out a lot within the last few Have done for years. I can see the fact that continuing the culture means that I am comfortable with the leadership of the company.

executive pay

Elon Musk’s stock package is unique, but it operates almost exclusively on the company’s performance. I have no problem with such compensation, and it is far better for me than the multi-million-dollar packages that are not tied to the company’s performance that many other companies delegate to executives.

Related, this is where I think there is a disconnect with reporting and the real world. I keep looking at the ratings of the articles about how much net profit Elon Musk has made from a good day, but since it’s all in stock that Musk isn’t selling, it’s not the actual price until the stock is sold. Does not go This is important, because Musk’s total assets are almost all on paper, not the money he has in the bank. Additionally, Musk could not sell all his stock without a very large catering of value, meaning that his assets are unique, or not easily converted to cash.

When it comes to the value of Tesla, the largest shareholder and the person with the most skin in the game is also the CEO, who is basically compensated only when he or she is the value of those shares for themselves and all shareholders Increases

If it’s not clear, I The love Musk’s executive pay structure. The rest of the company is a bit higher standard, but it is clearly tied to performance, as Musk will not be keeping people around who were not performing.

No stock buyback

Even in established companies, I have stock buybacks as the biggest red flag. Theoretically, with a share buyback, I own a slightly larger percentage of the company as a shareholder, but it seems to me that this is often done to meet a share price, which might not be the case. Must be, while often at the same time, the excuses give big cash bonuses to the officers. I don’t like it

I’d rather return an established company an extra profit in the form of a dividend, if there is nothing new to invest in it. With a company like Tesla, I would like to increase shares in the market if it is planned. In fact, Tesla sold an additional $ 5 billion in stock from the beginning of this month. I hope that $ 5 billion in cash is enough to fund the entire gig. I like this step very much, and we would be happy to hear that we are going to do it again.

long term plan

Battery Investor Day is less than two weeks away, but even without it, we see and hear a constant push about the future. I know that there is an expansion in China, a new plant in Texas, a new plant in Germany, the start of production for Cybert and Semi and Roadster, and we are starting to push into energy production. While it is clear that Tesla does not care about its quarterly revenue, it also takes a clear seat to future plans.

Is the future proof of business?

One way or another, we are going to transition from fossil fuels. Tesla is on the fringes of bleeding companies transitioning to transportation, and can make tremendous encroachments with grid management.

Do I understand what they do?

Tesla aims to accelerate the transition to sustainable energy. It accomplishes this by creating the most desirable vehicles of any type, while also developing and implementing methods for making and storing electricity. Tesla has done this by encouraging a culture of innovation outside the norms of the industries working within it.

Am i even close to them?

I’ll admit it, I’m very close to Tesla now – but I started investing in the company. I am also very good about compartmenting things that I like, while being able to admit loopholes about them. I think Tesla’s got a great product … but I can definitely say that I don’t invest the company just because I like the product.

Invest for the long haul?

Tesla Rooftop Solar

This was my last point, but I want to highlight it, because this is what has taken me under a bit of stress. Here’s what I wrote in my March 24 article:

I originally titled it “Don’t Try Time to Market”, but I think the real lesson is that you should never invest in a company that you own for at least three years. Do not intend to

None of my beliefs about Tesla have changed. I tell myself to be a little more cautious about whether they should invest in Tesla or not right now, because I don’t think there will be a regular double digit percentage increase, but I didn’t even think that there would be any Huge drawbacks.

And then yesterday, the announcement of a $ 5 billion stock sale announcement (which I like) and not added to the S&P 500 (which I honestly don’t care at all) by Tesla crushed the stock. And it made me stronger.

I had read a book on investing when I started – I honestly don’t remember which one I read, I probably read 100 or more – and it said that if you are invested in a stock and If you believe it, then it declines in price, you should consider it “on sale”, and an opportunity to invest.

The conclusion

On September 8, Tesla went “on sale”, and it was a sale I didn’t expect, so I had no ability to shuffle money to take advantage of that sale.

You may disagree. Perhaps Tesla is just a house of cards, ready to collapse on its own like many FUDsters – who suddenly seem to be out again – claim. My confidence in the company’s outlook has only become brighter (hooray) for stock sales, so seeing the decline as a sale that I can remember – the stock regained about half its losses as I wrote this – disappointing.

Tesla’s stock price is bothering me … because I think I missed a sale.

Disclaimer

I am a tesla [NASDAQ:TSLA] Shareholders who have bought shares within the last 12 months. The research I do for articles including this article may force me to increase or decrease stock positions. However, I will not do so within 48 hours after the publication of any article in which I discuss matters that I think may materially affect the stock price. I do not believe that my voice can or should affect the stock price by itself, and I use my work as my sole data point to choose to invest or divest in any company Cautionary warning anyone against. My article is My Opinion, which was prepared using research based on publicly available data. However, my research or conclusion may be incorrect.


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Tags: Elon Musk, Elon Musk Compensation, Tesla, Tesla Stock


About the Author

Froogle Mogul is a businessman first, looking at the frugal Mogul EVS from a business point of view. Working in multiple industries and in pivotal roles, he believes that the way to make people believe that the EV revolution is here is to look at vehicles as a business.