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I bought some TSLA early this year, before the split. As we approach inclusion into the S&P is it time to take some profit? Does anyone have the view that this price is not sustainable? I am a fan of the car and the company, but this current market cap looks like bubble territory.
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I bought some TSLA early this year, before the split.

Congratulations! You've done very well.

As we approach inclusion into the S&P is it time to take some profit? Does anyone have the view that this price is not sustainable? I am a fan of the car and the company, but this current market cap looks like bubble territory.

Beats me! I have been heavily invested in Tesla for years now, and my profits this year have been astounding. Other years not so much.

Tesla is growing exponentially (at least 50%/year), and will continue to do so for many years. Whether the stock price continues to reflect that reliably is unknown. It hasn't in the past.

Right now, over the next couple of months, all I see is good news (for the stock price) events: S&P inclusion reducing the available float by at least 15%; window dressing purchases by funds into the end of the year; upgraded bond rating to investment grade; upside surprise on 4th quarter production and delivery numbers; upside surprise on earnings. All of these will likely conspire to support the stock price. But will it? Nobody knows.

So what you should do depends on your time horizon and your goals. But regardless, you have to ask yourself a question -- do you feel lucky? If you sell now, due to a perceived bubble, will you have the prescience to get back in at the right time? Historically, very few people get that right.

Me, I'm sitting on what I've got and I'm confident it will be worth more a year from now (barring macro disasters).

-IGU-
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Potentially preachy answer. If not applicable, no worries, just skip it.
When people ask about this on any stock, I try to suggest a few questions.

What % of your overall portfolio is made up of the stock?

If it went down 25% tomorrow, how much would you "lose"? Are you comfortable with a retracement of that amount? If not, how much are you comfortable seeing disappear?

Do you need/could you use the cash for other purposes in your life - your real total "portfolio"?

FWIW: Well aware of the market euphemism "let your winners run, cut your losers", I frequently put in a trailing alert - a soft limit - about 10% below the close. If that alert is triggered, I look to see what's going on, and decide to put in another limit, or get out, depending on the stock.

Tesla is a growth company that's worth investing in. That said, there's a probability its best, explosive growth phase in the *stock* are behind it, as it is a manufacturing company and a car company at that. Sure, Amazon has blown up what, 2000% over the last 20 years? But that's simplistic - it's had several 80% drops along the way, a 40% drop as recently as Q4 19. Most individuals bail on those, and too frequently at what ends up being the bottom.

There's no harm preserving capital until a clearer picture emerges. Or selling most of an exploded position to maintain some interest in the company without being exposed to a valuation shock.

FC
2000 and 2008-9 survivor
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Tesla is a growth company that's worth investing in. That said, there's a probability its best, explosive growth phase in the *stock* are behind it...

Based on the "S" curve growth model, I don't think so. It's too early to be past the "explosive growth phase." I'd start to think about it when EVs have half the car market. Some simple maths:

Tesla will make 500,000 cars in 2020
Tesla has 20% of the current EV market making the uptake 2.5 million EVs
World wide car production is 100 million cars annually
EV market share, 2.5%

Sales of electric cars topped 2.1 million globally in 2019, surpassing 2018 – already a record year – to boost the stock to 7.2 million electric cars.

https://www.iea.org/reports/global-ev-outlook-2020

50% market share is 50 million cars. 20% of 50 million is 10 million cars. When Tesla is selling 10 million cars it's time to start selling TSLA! ;)


Another way to look at it. It was only in 2020 that EVs "crossed the chasm." That happens very early in the technology adoption lifetime cycle [TALC] which reinforces the "S" curve argument.

https://softwaretimes.com/pics/talc-800.png

from https://www.business-to-you.com/crossing-the-chasm-technolog...

The TALC curve shows the crossing at around 15% market penetration but with EVs it seems to be much earlier at just 2.5% market penetration. The explanation I've come up with is that the resistance to motor vehicles was overcome 100 yeas ago and much of the infrastructure is in place unlike when Henry Ford created the assembly line. Now the resistance is only to the new "fuel."


... as it is a manufacturing company and a car company at that.

Tesla has three manufacturing divisions, cars, energy storage, and solar roofs. Cars are making a transition to self driving and the software component is huge, the reason I dubbed Tesla a Laptop on Wheels. Like Apple, Tesla is making it's own chip that runs the car.

Also, EVs are much simpler than ICE cars to the point that parts suppliers are hurting.

Continental warns of price to livelihoods in electric car transition

Leading parts supplier decries speed of change while putting 30,000 jobs at risk

“An electric car has a lower employment density than a conventional car,” said Ms Reinhart, who oversees the company’s 230,000 staff.

Continental, one of the world’s largest car suppliers, has warned the transition to electric vehicles is happening too rapidly and at the expense of people’s livelihoods.


https://www.ft.com/content/fbfe9eeb-ebc3-47ff-ad43-82bbb500a...

Technology is deflationary and EVs are a poster child! By this cost advantage, at this growth stage, Tesla can not just compete with ICE but do it while earning much higher gross margins. On top of that, the no-dealer business model improves profitability even more.

Tesla has so much going for it that it's mind blowing.


That said, there can be a large drop in share price at any time and our investing strategy must be provisioned accordingly.


Denny Schlesinger
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Lots of good advice, but here is what I did, I sold my cost basis at $558.35. A little over a year or so ago it was one of my smallest holdings, it is now my #1 holding. I will continue to monitor and act appropriately (hopefully). You have to do what allows you to sleep at night.

James
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You have to do what allows you to sleep at night.

Absolutely, and arguably the most important thing! And selling your cost basis is a reasonable strategy.

Bruce
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Better answer than mine!
Now the resistance is only to the new "fuel."

And significant that resistance is. I wonder when the tipping point will come for gas station franchisers/ees to finally start putting in superchargers or fast chargers at their priceless corner lots with the convenience stores. I believe they could charge 4x their commercial electricity rate for someone to charge up 100 miles in 15 minutes, come in and get a coffee/donut/beverage or hit the restroom. Traffic is traffic, ICE or EV.

This loose public/private partnership with unsupported competing electric tech is a problem. It's like having to find a CD-X player vs a CD-R vs a DVD vs a BluRay vs a VHS vs a Betamax to charge the car (ex-Tesla supercharging).

When battery tech increases and if the car makers' prices come down to ICE or below levels, then the flip will start happening. Or in 2030, whichever is earlier.

Tesla the organization may also not be able to scale as fast as their sales. More sales means more support, although at much less frequency than ICEs (that parts thing) - but installing/refurbing body parts and aftermarket glam - , charging stations install and maint, and battery recharge/replace? may be what these parts stores and dealerships need to move to.
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Absolutely, and arguably the most important thing! And selling your cost basis is a reasonable strategy.

No it isn't. It is just money.
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Well ....... it might be a reasonable strategy, but it can (and quite often) be not the best way to invest. The shares that you sell just to offset your cost is lost gain in an up market. Those shares are no longer making you money.

I don't do it. But we all have our own investing systems.

Rich (haywool) always fully long a company or not an owner.
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Wow! I'm impressed with the great interest and investor savvy from all of you who posted to my question whether to consider "taking TSLA profits". My gratitude to each of you!

This is only my second post to a board but I am feeling even more happy now to call myself a fellow Fool!
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I bought my Tesla stocks before split too. To master investing, I think, just hold for long term next 10 years ! (Don't kill the golden goose that layout the golden eggs in compounding rate of 40~50% !).
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