Trading Tesla shares – here’s some insight

Tesla is one of the most talked-about companies in the world. That’s quite an achievement given it has been around for just 17 years, only going public in the summer of 2010. Upon floating, the company priced its shares at $17, giving Tesla a valuation of around $1.7 billion. Since then, there have been many ups and a few downs. But on 26th January this year Tesla’s shares hit an all-time high of $883. This gave the company a market capitalisation of just under $850 billion, enough to make its CEO Elon Musk the richest person in the world, overtaking Amazon’s founder Jeff Bezos.

 

It also meant that Tesla was the fifth largest US company by market capitalisation, behind only Apple, Microsoft, Amazon, and Alphabet (Google’s parent company). Yet it wasn’t until last year that the company finally managed to fulfil all the required criteria to be included in the S&P 500, making its debut on 21st December 2020. This gave the stock price another boost as fund managers who passively follow the index were forced to buy the stock to make sure they maintained an accurate weighting on their books.

 

At the end of August last year there was a 5-for-1 share split. The price of each Tesla share was divided by five, but now every investor had five times as many. This made it more affordable to trade, as well as less volatile. Trade Nation customers can benefit even more in terms of affordability as we offer a mini-rolling market in Tesla which reduces your margin requirement by a factor of 10. So this makes a Tesla mini-rolling trade a much less scary proposition than the full-blown version. You can find out more about Tesla and our other mini markets by exploring our website.

 

But to give an example of Tesla’s incredible growth, if you had invested just $1,000 during the IPO at $17 per share, on 26th January your holding would have been worth just under $260,000. That’s a stunning return by anyone’s standards. But you didn’t need to be an ‘early’ investor to cash in on Tesla. In June 2019 the shares traded below $40. In fact, there was considerable speculation that Tesla was going bust. Later Elon Musk admitted that the company was just a month away from bankruptcy due to major problems in ramping up promised production of its Model 3 car. But now it’s the short sellers who are getting their fingers burnt, and a whole lot more.

 

Tesla remains a favourite with investors and speculators. Some insist it’s the vertical integration of the company which means Tesla not only makes and sells you a vehicle but maintains and repairs it too. Others say it’s the visionary leadership of Elon Musk himself. Not only that, but Elon’s got rockets. He wants to go to Mars. He has a cool girlfriend, and his son has a code-style name. Add to that his outrageous tweets and he’s a hero to many people. But to others he’s a charlatan, a PT Barnum character who is pulling the wool over everyone’s eyes, regulators included. If so, then for now the act is working. Let’s check back when the financial environment gets tougher.

 

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