There are not many more controversial stocks than Tesla (NASDAQ: TSLA) the electric vehicle manufacturer that has turned the automotive world upside down since its IPO in 2010.
After Tesla first produced a "Concept Car" Roadster, he switched to the Model S, a high-end sedan, and the Model X, a luxury SUV. These achievements, however, have dwindled compared to the launch of Model 3, Tesla's first mass car, which hit the market in 2017 for just over $ 35,000.
The Model 3 has the potential to change the automotive industry, as a low-cost vehicle could boost the mass introduction of electric vehicles, resulting in a positive cycle in which Tesla achieves large economies of scale and increases margins and profits. Next year, the company will introduce the Model Y, an affordable crossover vehicle that could meet or exceed the success of the Model 3. Even more exciting is that Tesla will present its new pickup next week on 21
Although the stock is barely positive for the year, over the past three months it has risen more than 45%. The increase came after a third quarter report that outperformed earnings expectations and excitement about new vehicles still to be introduced.
Of course Musk and his team do not think short term, but long term. And in the long run, Tesla's stock was hugely profitable for early investors – even though the company itself is not profitable at the moment as it invests in disruptive growth. So, how well did early shareholders recognize?
The IPO price was how low?
None of these recent successes was secured when the company went public in June 2010 Team and their vision to create the first new public car company in the US since 1956. The risk was further increased when it was a pure electric vehicle, a concept that many large established companies had not produced profitably.
Tesla's stock was nothing more than a vision, a leading technology and a serial entrepreneur with a great track record. On June 29, 2010, she quoted at just $ 17. On the first trading day, the share rose by more than 40%. to $ 23.89. But even if you were a public investor who did not get into the pre-IPO price, you would still have made a small fortune.
Today, Tesla's stock is trading at $ 347, just over 20 times its IPO price, more than 14 times the price at the end of the first trading day. This corresponds to a total return of 1,941% and 1,322%, respectively. If you had invested $ 5,000 and were fortunate enough to pocket $ 17 for the IPO, your Tesla share would be worth $ 102,050 today. Over a period of nine years and four months, the average annual return is 38.3%.
Current Controversies Sound Past
Of course, Tesla has long been controversial. Many prominent investors such as Jim Chanos and David Einhorn are still short stocks of Tesla today. Musk and Unicorn even got into a word war on Twitter when Moschus ridiculed Unicorn's Short Bet and Unicorn questioned Tesla's truthfulness about his finances. Some other skeptics have focused on the many departures of corporate executives. On the other hand, cops might conclude that the high turnover is the result of Tesla's sophisticated workaholic culture, which brings overall benefits.
However, Tesla has always been controversial, even if the price was one-twentieth of today's price. As you can see, the short interest in Tesla since 2012 has been around 20% of total outstanding shares.
Needless to say, these short bets against Tesla have so far lost a lot of money.
It's worth being an optimist. With market capitalization rising to over $ 60 billion, few would call it "cheap." It was also hard to see the amazing success it would have on the market when it went public in 2010. However, it was not difficult to know that Elon Musk was smart, technologically savvy and had the vision to start a new business very disruptive product. Musk's bad luck was that Tesla had an unprecedented speed of innovation that could catapult him past large, bureaucratic and outdated incumbents. In light of recent results, Tesla seems to fulfill this promise.
Of course, exciting growth companies do not always work (Moveipass, anyone?). However, the lesson to investors – especially young investors – is that speculation about disruptive growth companies can sometimes pay off with highly-invested founding CEOs. As you can see, as long as you are well diversified, the returns of just one Tesla, if held long term, can offset many other growth investments that are unsuccessful. Just make sure you enter a series of bets and size positions based on your risk tolerance.
Tesla seems to be well on the way to writing history. While the stock may not have achieved the massive returns of the past nine years, it will certainly be exciting to watch.