The value of Tesla stocks has already experienced significant growth this year, but it is also known for its notable volatility. In the past twelve months, Tesla stocks have fluctuated between $102 and $315, resulting in a $213 gap that equates to more than 100% of the average closing price. In comparison, when applying the same calculation to Apple (AAPL), the gap only accounted for about 40% of the average price.
Despite being aware of the cause of fluctuations in Tesla’s stock value, it’s not always easy to understand why its stocks can move so drastically. For instance, within only a few days in May 2020, it rose by 42%. Two things occurred on May 25th that likely contributed to this sudden growth. Firstly, Nvidia (NVDA) announced that its AI-related business was doing better than expected, which caused their stock value to increase by 24%. Secondly, Ford Motor (F) and Tesla made a deal that would allow Ford drivers to use Tesla’s charging stations.
Tesla’s Rally Fueled by AI Frenzy
The recent surge in Tesla’s stock can be attributed to the excitement over artificial intelligence (AI), especially after Nvidia’s impressive quarterly report. However, with Tesla shares now trading at about 77 times the earnings estimated for 2023 (up from 25 times earlier this year), analysts have expressed concerns over the inflated stock valuation.
Wall Street is starting to echo these concerns, with both Morgan Stanley and Barclays downgrading their ratings on the stock due to the hype around AI. Despite this, there are still car-related factors that could impact Tesla’s sales, particularly with the upcoming release of the Q2 results.
As Tesla approaches this critical juncture, it may be a good time to sell some shares. While we aren’t giving up on the stock completely, we hope to utilize this volatile period to our advantage. With Tesla’s recent rally, investors holding a significant number of shares can sell half of their stake and still end up with the original value of their investment and some profit.
In light of these developments, let’s take a closer look at the future of Tesla’s stock.
AI Frenzy Driving Tesla’s Rally
Tesla’s focus on AI has propelled its stock to new heights in recent months. From self-driving cars to advanced computing systems in automobiles, the company’s AI initiatives have garnered attention from investors who see tremendous growth potential in this field.
However, despite Tesla’s impressive gains, there are concerns about the inflated valuation of its stock. With shares trading at 77 times the estimated earnings of 2023, investors are worried about a potential bubble in the market.
Wall Street Echoing Concerns
This week, both Morgan Stanley and Barclays downgraded their ratings on Tesla due to the hype around AI. While the exact impact of these downgrades remains to be seen, it’s clear that some analysts are questioning whether Tesla’s rally is sustainable.
Car Sales as a Concern
With Tesla’s Q2 results due to be released soon, there are growing concerns about the company’s car sales. According to Wall Street estimates, roughly 445,000 units are expected to be shipped during the period ending June 30th, up from 423,000 in Q1. If these forecasts hold true, the stock could continue to rise. However, missing these targets could spell trouble for Tesla.
Sell Shares Amid Volatility
In light of these developments, it may be a good time to sell some shares in Tesla. While the stock has been on an impressive run of late, we hope to utilize this volatile period to our advantage. By selling half of our stake in the company, we can still end up with the original value of our investment along with some profit.