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Tesla's stock is the most vulnerable to the condition of its innovator, Elon Musk.
In recent weeks, Tesla shares have reached a range of $ 60 and up. For a shareholder, it's a pretty boisterous ride. And although many still believe in Elon Musk and Tesla, the erratic behavior of the title is causing problems for shareholders.
Stock prices are taken into account on a number of different things. Most people know that the stock price of a company reflects its value. But what does the value really mean?
For the people of the world of finance, value is a calculable number. This can come from a lot of different ratios, in other words, the value is over. But for the average shareholder, the value can come from something else – something that is not calculable, the value of a brand.
For example, at the end of August and the beginning of September, Apple's shares rose. This is due in part to the anticipated release of its new iPhone and iWatch, which has been available since September 21st. The first reports on the iPhone XS and XS Max reported that there could be problems with the new product. , as well. Basically, public perception influences how much people value a brand, which in turn affects the price of stocks.
Product and sales are not the only thing people buy. Shareholders can and should really determine who runs the company or even which companies are most likely to have the next big idea. That's precisely what a company like Tesla is supporting.
After a relatively simple survey of the numbers, Tesla does not seem to be doing well. Tesla posted losses in the last two quarters and its bonds are rated B-minus by S & P Global. For those who are not familiar with bond ratings, B-less is considered an "undesirable" by financial analysts. This means that Tesla will probably not be able to repay the debt it owes investors.
If investors are not reimbursed, a company defaults and usually declares bankruptcy. This means that shareholders do not see a penny on the money they used to buy their shares. What a desappointment.
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With these abominable financial records, you may wonder how Tesla still sells nearly $ 275 a share. To put it briefly, people believe in Musk. Young and old alike realize that the individual transport sector must change and Musk seems to be the only major innovator at the height of the task.
He did an incredible job posing as a humanitarian. It is part of The Giving Pledge, which promises to devote the bulk of its wealth to philanthropic activities instead of keeping the money for its beneficiaries and for themselves. Musk followed his word; He funded international education efforts and donated materials to help the victims of the hurricane that devastated Puerto Rico.
But just as Musk's reputation has inflated Tesla's valuation, its recent battle with the SEC has caused stock prices to plummet. When Musk is in the grip of a negative press, it seems that the stock price of Tesla is destined to fall.
Shareholders should be cautious when they choose to invest their money in Tesla. Yes, Musk seems to be a good guy. I have no doubt that Musk will continue to be at the forefront of innovations in our society. What is less certain, is if Tesla will be there to see it.
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