Is Tesla stock way overvalued after announcing its first-ever stock split?
How do stock splits impact the company valuation and the stock price before and after the split? Am I adding the TSLA stock to my portfolio and if so, at what price? Do I even have any Tesla shares left in my portfolio since I last covered them here? And what type of investor should be looking into adding the Tesla stock to their portfolio? That’s right. My investment strategy should be different than yours because we likely have a different risk tolerance, are in different financial situations and have different financial goals for ourselves and our families.
In this video, I analyze the TSLA stock from 5 points of my signature Invest Diva Diamond Analysis (IDDA) which analyzes any asset from 5 points: fundamentals, technicals, market sentiment, risk assessment and overall how it can fit in your portfolio, and of course, my most recent price targets.
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Tesla skyrocketed another 14% after announcing its 1st-ever stock split. On August 28th, each Tesla share will split into 5: if you own 1 share trading at $1.5K, you’ll suddenly have 5 worth $300.
Apple just announced its 5th stock split since 1987 beginning of August too, so Tesla appears to be following Apple’s footsteps when it comes to marketing. I talk about the Apple stock split in this video so make sure you check it out.
Why Do Companies Split Stocks?
Companies split their stock to make it appear cheaper for regular investors to buy shares which are just a play on our emotions because, in reality, you can invest in any stock no matter how pricey it is, using fractional purchase options that most brokers offer. The only thing that’s different is that in most cases, you can’t set buy limit orders if you’re purchasing fractional amounts. So the stock split does have some merits for value investors or those who follow dollar-cost-averaging methods — but splits don’t change a company’s overall value. The Tesla pizza pie will be cut into smaller slices, but it’ll still be the same amount of pizza.
Of course, many investors don’t care about that and are currently simply riding the Tesla bullish ride… But when will this uptrend end?
Let’s get to fundamentals first.
Tesla Stock Analysis – Fundamentals
If you’ve followed me for a while you know my husband and I are big Tesla fans and have been driving almost all its models and even have a tiny one for our little toddler.
Tesla has a chance to be the dominant electric vehicle company as its years ahead of its competition, it’s the leading autonomous vehicle player, and also has its hands in sustainable energy with energy generation and storage products.
It has a charismatic CEO (trust me, it matters) and phenomenal marketing and the ability to sustain hardcore fans. But hardcore Tesla fans are different than Tesla investors. Tesla does NOT pay dividend payments so it’s not suitable for investors who like to get paid on a quarterly basis, and its next earnings date is not until October 21 so we have some time for volatility.
Tesla Stock Market Sentiment Analysis
The majority of investors on Wall street are actually puzzled about how much Tesla has soared since the stock split announcement with most staying in neutral zone.
Tesla Stock Bulls Say…
- Tesla could still go higher than this because there’s a strong demand for Tesla vehicles in the USA, in Europe, and in Asia.
- Any constraints on sales earlier in 2020 were caused by supply problems and not by any lack of demand, and that they’re bullish because Tesla is taking on large numbers of new employees around the world to meet growing demand.
- Tesla has the potential to change the world with long-range EV technology, AV technology, and battery technology…
- Its unique Supercharger network makes Tesla the only automaker directly trying to comfort the range anxiety of buying an EV…
Tesla Stock Bears Say…
- They don’t buy it because Tesla Model 3 was down 94% compared to one year ago in Norway, Sweden and The Netherlands and that this is just the beginning of Tesla’s market share troubles in Europe.
- Investing in Tesla carries tremendous uncertainty. The market has high expectations for the stock, so a slowdown in growth, execution problems, or lack of capital could lead to a severe decline in the stock price.
- Mass EV adoption by consumers could be many more years away than Tesla expects.
To learn about 10 stocks I would buy today rather than Tesla, click here to join Invest Diva’s Premium Investing Group aka PIG.
You might also like: Tesla Stock Price Analysis 2020 | Is TSLA Still A Good Buy Or Did You Miss Out?
Tesla Stock Price – Technical Analysis
The Tesla stock price has reached a new all-time high above $1,900 before the split. In this video, I explain why I have set buy limit orders at $1435 and $1202.
The price remains above the daily Ichimoku cloud.
Check out my book Ichimoku Secrets.
Find out about my strategies for 100s of more assets, become a Premium Investing Group (PIG) member.
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