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Better choice: Hold TSLA stock or buy the Model S now ?

Better choice: Hold TSLA stock or buy the Model S now ?

The early TM critics said “buy the car not the stock” … were they wrong ... $17 to $36 per share! Could it now be said “buy the stock not the car” !!! I really don’t need the S until my wife retires (5-7yrs) and we have time to do interstate travel. However, I have a hopeless case of Tesla Addiction and WANT the S now. Her challenge to me is "if you are that much of a believer, keep the money in the stock and delay the purchase." So my rationale to her (having the car now vs holding 2000 shares TSLA …i.e. you can’t do both) is:

1) Jim Cramer says “pigs get slaughtered.” I have already made enough on the stock to pay for most of the options offered on the car (bought and sold shares since the IPO--- currently holding only 400 shares which I’ll sell to cover my battery upgrade).

2) THE MACRO ECOMINIC ENVIORMENT IS WEAK. I think the stock market is in for a 20% correction in the next 3 to 6 months hurting TSLA more so because of it’s high beta (volatility). I need this money to buy the car so that is why I've already taken profits.

3) THE S WILL NEVER BE CHEAPER. Aluminum is currently at a low but could jump with other commodities (not sure if TSLA has a hedge on Aluminum) and inflation (labor and material) will force price increases at a time when Federal and State rebates (depending on election) may go away. Inflation costs could be offset by economy of scale and tech innovation…big unknown. I think TM will price the S just like a “top of the line” computer E.G. Apples's Mac Pro price never comes down … you just get a faster/better performance Mac.

4) GAS LINES. What if Israel bombs Iran? Wait for an hour to pay $7 per gallon (already close to $5 in CA)?

5) ENVIORMENTAL, COST OF OWNERSHIP, SUPPORT OF US MADE/JOBS, AND ENERGY INDEPENDENCE discussed already in this forum.

6) FINALLY … even if I sit in it and go nowhere … it is a piece of art to behold. Sadly, I miss at least a double as TSLA goes to 80 per share in 2018 :(

What to do, What to do ...... help!

EdG | 14. März 2012

@joefiorelli: You clearly spend more time analyzing the markets than I, but I'd like to point out one thing. When he says "pigs get slaughtered" it makes sense, but only to a point.

If you bought AAPL at 200 and didn't sell at 250, were you a pig, or were you smart, or lucky? Theory states that the current price is the balance point where just as much money says it's going up as down. So being a "pig" means you didn't sell in time, nothing more. Or maybe I'm just trying to excuse myself for, in the past, not selling in time.

Coming to this forum for advice on when to sell TSLA shares? Most here seem to say "never". Pigs?

David M. | 14. März 2012

@Joe - Easy answer. Consider this.
This week, I was just notified that a co-worker in his 50s was diagnosed with terminal cancer. He's in hospice.

We never know what the future holds for us. So, here's my point, if you want the Model S, buy the car. So what, if the stock goes to $50 or $60 by this time next year. You'll smile when you view your account status online. That's about it.

The Model S car owners (like me) will be smiling every morning, every evening, and everytime they drive by a gas station.

BYT | 14. März 2012

I smile at the thought of it NOW!

Larry Chanin | 14. März 2012

Joe,

With all due respect you are attempting to rationalize a decision which is purely emotional in its very nature. Virtually all Tesla enthusiasts, myself included, at one point in time fall into this trap of trying to justify buying the car based on various economic justifications. However, this is simply a self delusion used to rationalize spending more money than we normally would. If you really love the car, buy it and enjoy it. As David points out, life is too short.

Larry

jbunn | 14. März 2012

76 bucks at the gas station today, and that's my "every 6 day ritual". Factor that in to my calculations as well.

Vawlkus | 15. März 2012

Classic catch 22. Buy the car, raising the stock of the company, or hold the stock while 9 thousand other people buy the car and raise the stock :)
Me, I'm waiting to see how the next couple years play out. When Tesla starts to deliver on Model S, I'm betting their stock will go up. Maybe only briefly, but it will be up. Once the first couple thousand hit the streets, and the public can see what an electric can do we'll either see Tesla level off, or interest will skyrocket. I leave it to you to decide what you need to do in either scenario ;)
For now, my advice is to hold the stock. When the preorders are filled, you should be able to tell if you want to continue holding the stock, or liquidate it to own the car. If the price goes up like I think it will, you might be able to do both ;)

ChristianG | 15. März 2012

almost noone will buy and sell their stuff at the right time. you can analyse markets all you want. Many of them don't act like the should. Analysts excuse this with phrases like 'well that was already in the market' and other bla bla bla.

So the question is, with what could you live better?

A visionary car, hopefully in excellent quality and a stock you don't have anymore but is now twice the price it was.

Or a greater Win or Loss and the security that the Model S is all tested and proven by thousands of people.

Also you said you need the car in 5-7 years. That's around the garanty of the battery-pack. And then you'll drive an 'old' car. And even as it is electric and should... age pretty well theoretically. Is it ok for you to drive an old car then?

David70 | 15. März 2012

Vawlkus,

That's what I'm hoping for. Sell enough off to pay for the base cost and do the rest(85 kWh, TECH package, etc) with savings and loan. Still have half my stock available for long term growth (i.e. at least another year or two).

Larry Chanin | 15. März 2012

This posting in the Tesla Motors Club forum maybe of interest.

http://www.teslamotorsclub.com/showthread.php/4677-Are-you-also-investin...

Larry

gagliardilou | 15. März 2012

I want to do both. I want the car now and I do own and I want to purchase more Tesla stock. Doing both is a pretty big committment to Tesla and what they are trying to do. I feel they will in fact do it.

I agree with David and Larry, life is short.

petero | 16. März 2012

Plan B. Lease the "S" and keep the stock! Win-Win.

Discoducky | 16. März 2012

@petero, my thoughts exactly, if the stock appreciates more than the cost of the lease *AND* I'm wanting a Model X anyway.

We'll have to see what the lease contract states as we plan on driving a fair bit.

Brian H | 16. März 2012

ChristianG | March 15, 2012 new

almost noone will buy and sell their stuff at the right time.

In a way, that's a logical given. While the market is not true zero sum, it is impossible for everyone to make the maximum return; there must be buyers, and they will either do better or worse than you.

JoeFee | 19. März 2012

Thanks for all the input ....

Joe

Timo | 20. März 2012

@ Brian H, ChristianG; depends of how you define "right time". If company is making profit and stock price is raising it might be "right time" for both, buyer and seller. People sell when they think they have better use for the money, or there is a risk of starting to lose money. If case is former, then selling even when stock price is still going up might be right choice. Buying at that time obviously is not bad either. OTOH you can go wrong in both ways too.

David70 | 20. März 2012

There's an old quote attributed to Joe Kennedy (J.F.K.'s father).

"I got rich by selling stock too soon."

keithz | 17. April 2012

Why would you not just make a reservation and hold on to the stock longer?

JoeFee | 18. April 2012

I already have a reservation: P469. I want to use the car for iner-state travel so I would be in for Performance S @ 104K out-the-door. I plan to buy the car cash so I can not hold 2000 shares ... I now have only 300 shares which I'll sell by Sept to buy the car. I'm still conflicted and have not made a final decision. If TSLA fell to $30 I may re-buy shares and use my 1 time pass when I get the call from TSLA. My fear then is when will the fed/CA rebates go away ... would hate to loose that but worse of all is .... delayed gratification :(

JoeFee | 10. Mai 2012

Decided to keep half the stock (bought back 600 shares that I sold for 38 at 31) and get the car ... half my cake and eat it too!!!

brianman | 10. Mai 2012

"half my cake and eat it too!!!"

Interesting turn of phrase.

Verbose translation:
To solve the problem of having your cake and eating it too, cut it in half and enjoy both options in moderation.

Brian H | 10. Mai 2012

@joe;
Did your Sig list call influence that? Or was that later?

Vawlkus | 11. Mai 2012

Personally, I'm waiting until most of the reservations are handled before I think about selling my stock

JoeFee | 11. Mai 2012

My main influence to sell @ 38 was to raise cash to buy the car but after the drop to 30-31 --- decided to re-buy 600 shares. I"ll hold as much stock as I can for as long as I can (but will also take advantage of big moves in TSLA trading range if the opportunity presents itself again --- of course this also presumes no break down in the fundamental long business case to hold (any) stock).

Brian H | 11. Mai 2012

Have you considered putting maybe $1K into naked calls, and either holding to execution date, or selling on a major move up? You might find you can afford to have your cake and eat it too ...

JoeFee | 11. Mai 2012

No, I'm a simple man and have not got into option trading … but it sounds interesting!

Brian H | 18. Mai 2012

Down 12% in 4 days (~$28.50) ! I wonder if the Fisker Fire had any influence on that. I assume, from various comments, that a number of limit orders have kicked in to stock up on stock?

BYT | 18. Mai 2012

I think the abundance of shorts and the general fail of the Nasdaq as a whole is to blame over anything else.

Brian H | 19. Mai 2012

Another $1 yesterday (Fri. May 18).

I don't see how an "abundance of shorts" would directly drive prices down, as shorts are share purchases-in-waiting at prices as of the original date that must be covered by (matched to) buys at current prices, before the shorts expire.

It takes an external market factor to move prices down; short covering can only move them up. I'm more inclined to blame spill-over from the Fisker Fire, if anything. I suppose exaggeration of Nasdaq moves because of TSLA volatility and small volume (relatively) might have some impact.

Let the buying opportunities multiply! Deliveries start soon (~ 1 month).

BYT | 19. Mai 2012

To place a short order doesn't effect it no, but an abundance of them casts a vast negative shadow that makes it difficult for those investing to ignore, then compound that with the overall Nasdaq performance now and for the next few months, well, it doesn't bode positively. We need some positive news from TSLA when the cars are handed to their owners and the final product is on the streets. Then those shorts will, well, loose their shorts in more ways then one... :)

JoeFee | 19. Mai 2012

+1 BYT

Brian H | 21. Mai 2012

"Then those shorts will, well, loose their shorts in more ways then one... :)"

They may lose them, too!
>;-P
;)

Brian H | 21. Mai 2012

Joe;
Just noticed in your head posting, you mispronounce "environment", and spell it the way you say it: "ENVIORMENT".

Oops!
;)

BYT | 21. Mai 2012

LOL, I forget that I need to run my posts trough Word first before posting here when Brian H is on the prowl. I should have written it as prowel to keep you on your toes... ;) This is after all a fun enviroment to post in, since that is how I say it... :D Kept the belt on those loose shorts!

OK, I'm just being a stinker now aren't I?

JoeFee | 21. Mai 2012

@Brian H & BYT

I'M FROM PHILLY WHAT YA EXPECT!

David M. | 22. Mai 2012

Short answer.
Yes - Hold the stock.
Yes - Buy the Model S.

I can't remember a better American success story in my lifetime!

Vawlkus | 22. Mai 2012

But..... Elon's Canadian :D

Brian H | 22. Mai 2012

Vawlkus;
Sort of. Born in South Africa, mother dual citizen Canada/SA, emigrated to Canada for a while in order to get into the US! He worked here for a while, travelled across the country, so he has some creds. But he was never a Canadian citizen, AFAIK.

Vawlkus | 22. Mai 2012

Still counts :P

jandkw | 09. Mai 2013

As a long time investor I learned many lessons not holding a stock for too long and so I unloaded all of my shares at $70 earlier and pretty happy with the price sold. I believe TSLA will go over $100 this year and plan to buy some back at $50+ when retreated.

FLsportscarenth... | 10. Mai 2013

If I had about 100k to play with with I would still buy a 60 and use the 25k left to buy stock. P85s are wonderful machines but buying a 60 means you can have your cake and eat it too.

If you have the money, buy it and be happy - you will not regret it and if you drive it for 12 years it pays for itself (depending on how much you drive maybe sooner) nothing wrong with older cars if you take care of them - smart not to trade in after 5 years else you get hit with the steepest depreciation slope...

JoeFee | 12. Mai 2013

Update: In the end, I decided to hold 2000 shares of stock @ 28-30 and get the Sig Perf. This was against my trading rules, personal budget, etc but I was willing to take the risk. So far, the TSLA stock (most of this profit has been booked already) has paid for 80% of the Sig and this week I’m looking to pay for the remaining 20%. Wow…what a RIDE it has been … yes the stock and the car :)

SamO | 12. Mai 2013

@joe

Just read this thread and glad to hear that you kept the shares.

JoeFee | 13. Mai 2013

@SamoSam | MAY 12, 2013

Thanks…me too! This is the 3rd time I’ve flipped my shares since 2010…maybe I’ll get the last 20% this time ($82 today). My wife almost killed me on this one but she is REALLY happy now.