We have all seen the Tesla cult-following drive stock prices higher when the company’s outlook was uncertain. But there have also been blood sucking short sellers that spread fake reports or exaggerated negative news. So what are we to believe with so much speculation surrounding their stock split.
When is the Tesla stock split?
Their Tesla stock split is scheduled to take place on August 28, 2020 at the end of the trading day. How will the market react? We’ll only know when Monday comes but we have one scenario that seems most likely to happen.
The 5 to 1 Tesla stock split is going to bring down the stock price to around $450. We know already that Tesla stock has a huge following but what does that mean in terms of a stock split? It means that Tesla stock will be accessible to an even larger portion of their following.
Tesla’s Meteoric Rise
The stock is hovering around $2,200 as of August 28, 2020. Tesla stock has seen a meteoric rise over the past few months. The stock has climbed over 60% since the Tesla stock split was announced, over 400% from the start of this year, and over 900% going back a full year.
This all points to the stock have extreme momentum but how much of that can be attributed to the company’s actual success? Not much. Most of it is based on what the company is expected to be in the future.
Betting on the Future
The biggest argument that the cult following offers is that Tesla should be considered more of a technology company instead of a car company. And there is definitely some merit to that but it seems exaggerated.
Tesla is the dominant force in the EV market but they are soon going to have some serious competition. One of them being the Lucid Air which is set to compete with the Model S. The Model 3 seems to have a few more years being the dominant force in its category. But other companies like Mercedes-Benz, Jaguar, and Cadillac are developing electric SUVs that are going to be serious competition to the Model X.
Tesla’s Technology Carrying the Weight
So their market share of the EV market doesn’t have a great outlook but their technology has been the focal point in their stock price rise. Their autonomous driving equipment is ahead of the curve compared to what other companies are offering so that a good sign.
Their solar technology hasn’t been proven in the market yet but there have been some big claims made about it. One thing that makes them unique enough to steal a good portion of the market from their competitors comes in the form of their Solar Roofs.
Solar Roofs and Solar Panels
The Solar Roofs provide a way to obtain solar energy without sacrificing style. Solar Roofs have the appearance of regular roof tiles but with a gloss finish which gives the house a more futuristic finish.
And they are said to be 3x stronger than regular roof tiles so you don’t have to worry about sacrificing sturdiness. According to Tesla, they are also going to be priced around the same amount as the Solar Panels which should make them a realistic option for some people.
Their stock price seems to be pricing in future success in the solar field. Will it succeed? They have the resources to make it happen.
Semi Production Delayed
Tesla investors are also hoping for big success in their Semi. However, production has been postponed a few times which is giving their competitors a chance to catch up. Tesla stock also seems to have success in this field priced in as well.
So what do I think will happen with the stock split? The Tesla stock price should rise significantly given its volatile nature. The rise should last at least a few weeks as a new wave of investors are going to jump on the opportunity to own some Tesla stock.
But you should expect a decline after a while as the stock price should recalibrate. After that, it is going to be a face off between the short sellers and cult-followers. With an expected rise in EV development coming from other brands, we expect the Tesla stock to be less volatile.
You should expect the Tesla stock price to continue rising substantially once the stock splits but be cautious after that. Make sure to keep a close eye on it after the split to make sure you’re not caught in a downfall if it does happen.
Do not base any investment decision on anything that you read on this post. I am not qualified nor licensed to provide advice on stocks and investing. This is an opinion piece mainly mean to spread some information about a certain situation. All claims in this article are speculative and should not be taken as advice. I do not own or plan on owning any stock or options from the companies mentioned above.