tesla stock

12 Aug: Why the Tesla stock split adds no value to the stock

Tesla stock news

Stock splits will have no impact on stockholders’ equity. There are many studies made to investigate whether a stock split is still considered a policy that creates value for the underlying company and the rationale behind such action for companies listed on the NASDAQ. The results of a study indicate a positive market reaction at the stock split announcement and that the liquidity hypothesis explains well the rationale for the stock splits.

So the 5:1 Tesla stock split at the end of August 2020, does not add any value from a fundamental perspective. It does not make the Tesla stock more valuable due to an earnings positive surprise, an increase in profitability, or more positive free cash flows. Yet today August 12, 2020, the Tesla, Inc. (TSLA) stock closed at 1,554.76+180.37 (+13.12%) as it was announced that a five-for-one stock split. It has nothing to do with the fundamental view or the valuation of the company. It will only adjust the price lower when it will take place. Education is everything in the stock market and in investing. Stocks can move for many reasons.

11 Jul: Tesla, Inc. (TSLA) stock is the definition of a financial bubble

Tesla (TSLA) stock made a new 52-week and closed above the $1,500 for the first time ever

Investing in stocks, choosing stocks to buy, stocks to sell is not an easy task. Speculators ignore the fundamentals of stocks and buy or sell stocks only to profit from short-term price movements. This is the game of the stock market. Tesla (TSLA) stock on Friday, July 10, 2020, made a new 52-week high and closed at 1,544.65,+150.37 (+10.78%).

Why I believe Tesla (TSLA) stock is extremely overvalued and a financial bubble

Two reasons:

1.Net income

2. Free cash flows

After 10 years of going public Tesla (TSLA) struggles to make a profit. And yet some Wall street analysts increase their price target on Tesla. For the years 2019, 2018, 2017 and 2016 the net income (in thousands) for Tesla was -862,000, -976,091 ,-1,961,400, and -674,914 respectively.

The free cash flows (in thousands) for the same years were 968,000, -221,714, -4,142,008 and -1,564,300 respectively. Turning to the quarterly numbers for the free cash flows, the figures for the last 4 quarters were -921,000, 976,000, ,346,400 and 590,399.

Stock market data: Yahoo Finance

The market is pushing Tesla stock higher on hopes and expectations of an inclusion soon in the S&P 500 based on profitability for the last 4 quarters. Even if this is the case the valuation of Tesla stock to my financial analysis does not justify this stock price, and is too overvalued. The catalyst that Tesla will be a dominant player in the electric cars is not credible as competition is too intense from other car manufacturers. For now speculators drive the Tesla stock much higher. But even if the stock is included in the S&P 500, after such a big stock rally, who will drive the stock price higher?

I do not own or have sold any shares of Tesla, but this stock has moved too fast and too high without any solid fundamental reason.

14 Jun: TSLA stock price performance for the week ending on June 12, 2020

TSLA stock price

TSLA stock closed at 935.28-37.56 (-3.86%) on Friday June 12,2 2020. For the week ending on June 12, 202o TSLA stock had a performance of +5.60%. Shares of Tesla, Inc. (NASDAQ:TSLA) made a new 52-week the previous week. Tesla stock has a 52-week range of 211.00 – 1,027.48. Tesla stock has a Beta (5Y Monthly) of 1.17, and a PE Ratio (TTM) N/A. Tesla has a market capitalization of 173.471 Billion as of June 12, 2020.

Stock market data: Yahoo Finance, MarketWatch

TSLA stock chart

TSLA stock chart
TSLA stock chart

Source: Stockscharts.com

Tesla stock news

“Tesla stock gets two downgrades, falls below $1,000.Tesla Inc. stock lost some of its luster Friday after Goldman Sachs and Morgan Stanley moved to downgrade the shares, saying there are risks investors might have ignored as they rewarded the company with a dizzying valuation.

Tesla TSLA, -3.86% shares fell on Friday but garnered a weekly gain of 5.6%. The shares closed at a record $1,025.05 on Wednesday.”

Source: https://www.marketwatch.com/story/tesla-stock-gets-two-downgrades-falls-below-1000-2020-06-12

07 Jun: Tesla, Inc. (TSLA) stock price performance for June 5, 2020

Tesla, Inc. (TSLA) stock price weekly performance

Tesla Inc.(NASDAQ:TSLA) stock performance for the week ending on June 5, 2020, was -1.39%. TSLA stock price has a 52-week range of 207.51 – 968.99 and a P/E ratio that is N/A. TSLA stock has a YTD performance of +111.71%. Shares of Tesla, Inc. have a beta of 1.23, and the company has a market cap of $164.27B.

Stock market data: MarketWatch

Tesla, Inc. (TSLA) stock price daily chart

Tesla, Inc. (TSLA) stock price daily chart
Tesla, Inc. (TSLA) stock price daily chart

Source: Stockscharts

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02 May: Tesla stock the price is too high

Tesla stock news

“Elon Musk wipes nearly $15 billion off Tesla’s valuation by tweeting that shares are ‘too high.Tesla stock stumbles more than 10% on Friday.

Tesla TSLA, -10.30% shares extended losses after his tweets and fell 10% to close at $701.32 Friday. The shares had traded as high as $772.77 earlier in the session.

Tesla ended the day with a market cap around $130 billion, having lost nearly $15 billion from Thursday’s close.”

Stock market source: https://www.marketwatch.com/story/elon-musk-tweets-that-tesla-shares-are-too-high-2020-05-01?siteid=yhoof2&yptr=yahoo

Tesla stock chart

Tesla stock chart
Tesla stock chart

The stock market reacted to this tweet and Tesla stock fell. At the close, the stock price for Tesla, Inc. (TSLA) was 701.32-80.56 (-10.30%). It is hard to make any Tesla stock predictions. In the Tesla stock chart above a huge rally is shown from the price of about 400 to about 850, so nay profit-taking in Tesla stock is reasonable. Besides that, Tesla stock is among very popular and trending stocks in Wall Street.

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29 Mar: TSLA stock price gained over 20% this week

TSLA stock

Tesla, Inc. (TSLA) stock closed at 514.36-13.80 (-2.61%) on Friday, March 27, 2020. TSLA stock for the week gained +20.31%.

Tesla, Inc. (TSLA) stock daily chart
Tesla, Inc. (TSLA) stock daily chart

TSLA stock news

Stock market data: MarketWatch, Stockscharts

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