For us veteran Tesla + TSLA owners, a thread about the stock.
Focus here is specifically on where the price goes, when it does, and why.
A virtual watering hole, where we all can brew and tap our best crowdsourced reasoning.
Please chime in with your predictions and rationale.
A starting point for discussion - see my summary below. History makes a great looking glass.
So here’s a Dickens-inspired retrospective. A synopsis of events to date, to provide context for what is yet to come.
Years of stagnation.
2014 - 2019, Tesla sales grew 10X, but the stock didn’t track this growth.
Why? Aggressive FUD and short sale campaigns.
Oil + Auto interests faced disruption, and actively worked to suppress investor recognition of value.
June 2019 Low - $35
(this date marked peak fud + short power)
Jan 2, 2020 - $86
(Q2+Q3 profits marked a turning point in sentiment)
Dec 14 2020 - $640
(Q4+Q1+Q2+Q3 profit + S&P inclusion)
740% ytd share price growth. All in one year ... after languishing for so many.
During the pandemic, 50% growth, vs declines for auto peers. Awesome, but still can’t explain 7X.
True catalyst - the dam broke. The suppression campaigns finally yielded to reality.
Many years of hard-won value were finally recognized, accelerated by a fundamental rethink of society in the pandemic.
Tesla isn’t suddenly 7X better in 2020. It was already better beforehand.
That 2019 price was way undervalued, and now it’s getting its correction.
This rethink finally reached the S&P citadel, marking a fundamental maturation and recognition of the enterprise by the biggest bastions of capital.
Result - a huge expansion of the investor audience. Tesla is now a very, very, blue-chip stock.
Overvalued? No. Overdue. Long overdue.
So where is this headed? On Dec 21, and beyond?
Will it rise? Hell yes.
Will it then tank?
There may be an answer in logic. See below for some reasoning.
During this year, a pattern emerged. TSLA rose ahead of good news, and relaxed after.
After TSLA got reliably profitable, surprise expectations were often baked-in ahead of events.
So will S&P inclusion follow this same well-worn pattern? We hear a lot of noise that says it will.
My conjecture - I think not.
Good business news - quarterly beats, battery day, fsd releases ... these all boost sentiment.
But S&P - this is different. There is no precedent for this scale of step-change event in holdings.
Not in TSLA history. Not even in S&P history.
Not only quantitatively, but qualitatively too.
When speculative short term traders dominated activity, you had a speculative pattern.
But when 270 million shares, 36% of all float, go to index funds, the pattern changes.
Index funds substantially hold the stock between balancings. They don’t high frequency trade.
A bigger pool of capital is about to enter the room, and displace much of the HF influence.
This acts like a giant shock absorber, a dampener of wild speculative swings.
It can’t damp macro forces, but no longer can a small gang of hedge funds push wild moves.
This era is different. TSLA is graduating.
When those shares pass from front-runners to index funds, the behavior changes.
Half of these shares will change hands by the 21st with index funds. And half will change in Jan / Feb with the tracking funds.
So it’s not all over on the 21st. A lot more will move to longer term holders in the 8 weeks following inclusion.
Add this all up, and demand will go up for several weeks. But supply is fixed.
So price should go up somewhat steadily until the new equilibrium is reached.
And the new dominant holders will be longs, who tend to reduce volatility.
No one can predict any of this precisely, but my thesis is this -
Excluding macro events, the pullbacks will be less pronounced in the next several weeks.
The rise will be relatively steady.
So - My price guesses?
700’s within this month, and approaching 800 by end of Jan.
If my inferences turn out to be right (they could be totally wrong), then a wiser strategy would be to not sell early, attempting to guess at profit-taking, but instead follow Samo’s Math Haiku -
Time in market > timing market
Please share your thoughts. Open-sourcing strategies can make a higher overall yield for all of us independent investors, and damp the influence of speculative traders.
Tesla is not just TSLA. It’s not just numbers.
It’s a real company, a real force in the world, that is solving real problems.
That is why we invested in the first place.
It’s still the best reason to own it long. Help them do what must be done.
Which also may just happen to be what creates the greatest wealth for all of us.
Happy Holidays to all!