Is the Tesla stock really too high?

May 4, 2020

On Friday, May 2nd, Elon Musk went on a twitter rampage that put him on the trending page and on the eyes of millions of Tesla shareholders. He began his poetic outburst talking about selling all of his possessions, and ended with expressing his opinion that the Tesla Motors share price was currently too high. As a consequence, almost instantly the Tesla share price dropped from $760 per share to (as of writing this) $701 per share. 

That begs the rest of us to ask the question, is the tesla stock really too high? In this brief article I will explain why I believe it’s not, and also why it is.

To begin, Tesla is a growing company. It’s only recently they overtook Ford and GM with market value. As of right now Tesla’s value as a company is that of Ford and GMs, combined. It was only a few years ago when Tesla debuted in the stock market and everyone wrote them off as market losers and unsustainable. Also, Tesla’s stock rocketed up in the later stages of 2019, peaking at nearly $1,000 per share. While the value of Tesla’s stock seems to be completely made up of news trends and hype surrounding Elon Musk and his latest projects, Tesla still produces and manufactures electric cars. That of which still has to meet quarter earnings, and P/E ratios. These days it seems to be that the CEO’s twitter lunacy and legitimacy is backed by his exciting vehicles. 

On the other hand, we see that Tesla stock is in fact, too high. We can think of many companies who peaked their stock price and then never really went back to their highs. This might be attributed to pure trends, and market hype. While Tesla is currently the new and exciting company on the block, they are still at a rather early stage of their company. Also, we could deduce that their share price is too high due to their CEO, Elon Musk. He is an extravagant man with ties to many of his own companies, and also his own opinions. The fall of another one of his companies such as SpaceX could be detrimental to the stock of Tesla. This has been seen historically as one of Space X’s rockets blew up, the next morning Tesla shares were down by 5%. Five percent may not seem like much, but when talking about Tesla's volume in shares that is worth billions of dollars.

In conclusion, the share price of Tesla’s stock will continue to fluctuate dramatically. Until the foreseen future, we can assure that Elon Musk will be the head of Tesla Motors. While that is happening we can almost assure that as he keeps being an online celebrity, the security of Tesla’s share price will almost unequivocally be tied to his words.