Shares of Tesla Continue to Rise Despite Elon Musk’s Best Efforts
If you’ve ever thought to yourself that Elon Musk must have the Midas touch, it is certainly understandable, as is wondering, “What on earth is he thinking?” When you take a person seemingly hell-bent on sabotaging himself from time to time, combined with poor ratings for the Model X, the fact that shares in his auto company Tesla keep rising is astounding to some people.
Is he crazy, or crazy good at manipulating followers on social media to keep his brand in the news? Only time and a few formal inquiries will tell.
Has Elon Musk lost it?
To make the stock prices even more remarkable, let’s put it in context with some of the latest developments. How does a revolutionary thinker, an innovator, a lover of technology (after all, AI is a component of his new son’s out-of-this-world name) like Musk have a hand in distributing a car that makes it easy for hackers to get owners’ personal information?
In perhaps his strangest move to date, Musk tweeted out how he thought shares of his own company were too high. To be fair, this did cause the stock price to drop over $80 per share on May 1.
However, by Wednesday, May 6, the price was not only recovered but priced higher than before and still rising. But while Tesla stock continues to dominate the Nasdaq-100, there is also a question about the viability of the Tesla brand.
Can a remarkable product rise above its creator?
When you think of companies that inspire confidence, they typically have leadership that, at least publicly, portray a cool head and understand the impact of public opinion, not to mention public safety.
Generally, a former chairperson who was forced to step down following controversy is not that type of leader. Nor is one who goes on social media rants. Yet, Tesla is on track to have another record-breaking year.
Why Tesla could continue to prosper despite Elon Musk
According to MarketWatch, there are three events that, should they occur, could propel Tesla to even greater heights in 2020. These are increased U.S. production, more market share in China, and joining the S&P 500.
Despite the impacts of the Coronavirus (COVID-19), Musk still anticipates a production target of 500,000 vehicles this year in the United States. Remember, instead of letting demand dictate the production targets, Tesla believes in the “build it, and they will come” philosophy, focusing on availability first. With the first quarter numbers looking positive, maybe they’ll pull it off.
With China reportedly being ground zero for the Coronavirus outbreak, it is hard to believe that March showed the highest sales in a single month ever for Tesla in that country. Even though automobile purchases in that region plummeted by 41% over the same month in 2019, Tesla still represented almost 1/3 of all electric vehicle sales. It is quite a feat to pull off record sales in an industry that has seen record declines in the past months.
Being invited to the virtual hallowed halls of the S&P 500 is like the holy grail for a publicly-traded company, but it isn’t easy to qualify. Tesla has had one of the first criteria under its proverbial belt for a while now: a market cap over $8.2 billion with a minimum of 250,000 shares traded per month.
The one hurdle that has so far eluded Tesla is four consecutive quarters of positive GAAP earnings. This could be the year, though, as Tesla completed three consecutive profitable quarters in April.
Is this the year for Tesla’s star to shine even brighter, or will Elon Musk eventually harpoon himself and Tesla along with him? It should make for an interesting ride.