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Tesla - a case study in patience and close monitoring
14 Apr 2021 (246 views)

In December 2020, when Tesla stock hit $700 USD, I cleared off all my holdings. I felt at that time that Tesla had reached the top end of its fair value. 

I had sold off a little too early. Tesla continued its ascent and reached $900 towards the end of January. I missed the last 30% of the uptrend, but I had no regrets. I felt that the price was too high and did not want to hold any long position when it was over valued.

During the next two months, Tesla's stock price weakened due to several factors. There was a move out of growth stocks. It affected Tesla and other growth stocks as well. 

When Tesla fell to $700 in late February, I bought 100 shares. It continued to fall over the next two weeks. It reached a low of $560 on 8 March. During this period, I bought another 200 shares to average down my cost. 

When Tesla reported its 1st quarter delivery, which exceeded the forecasts of most analyst, I added another 100 shares.

My total holding is 400 shares at an average cost of $649.

Tesla stock price stayed below $700 for several days after the strong delivery report. I was disappointed, but I kept fully invested (i.e. 400 shares) while monitoring the stock price closely every night.

An analyst from Canaccord gave a strong upgrade to Tesla on Monday 12 April which pushed the price above $720. The price jumped to $762 on the following night. 

https://www.cnbc.com/2021/04/12/canaccord-genuity-upgrades-tesla-to-buy-and-raises-price-target-to-1071-on-battery-innovation.html

At $762, my 400 shares now show a paper gain of $45,000 USD.

See the chart below for the price trend during the past six months.

Here are the lessons from this journey.

a) I was prepared to sell all the holdings when the stock went above what I consider to be the upper range of its value.

b) I was prepared to be patient and wait for the stock to come back to the lower range of its fair value, say $650. 

c) I was prepared to hold on to the shares when it is at a reasonable value.

d) Luck plays an important part, but it is helpful to have an understanding of the acceptable price range. At the lower end, I am prepared to increase my holdings. At the upper end, I am prepared to sell some or all of the holdings.

What is my assessment for Tesla, now that it is now at $762? 

I am prepared to sell some of my holdings when it pass $800. I will monitor the situation closely and may sell all my stock when it pass $900. 

Over the long term, some bullish analysts predict that Tesla stock price can reach $1,500. I prefer to take my profit at $900 (or slightly higher) and wait for a price correction to reinvest in the stock.

This video explains the big move in Tesla stock after the release of the 1Q delivery numbers.
https://www.youtube.com/watch?v=xKGginTnHAs

Tan Kin Lian







 


Tesla - a case study in patience and close monitoring
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In December 2020, when Tesla stock hit $700 USD, I cleared off all my holdings. I felt at that time that Tesla had reached the top end of its fair value. 

I had sold off a little too early. Tesla continued its ascent and reached $900 towards the end of January. I missed the last 30% of the uptrend, but I had no regrets. I felt that the price was too high and did not want to hold any long position when it was over valued.

During the next two months, Tesla's stock price weakened due to several factors. There was a move out of growth stocks. It affected Tesla and other growth stocks as well. 

When Tesla fell to $700 in late February, I bought 100 shares. It continued to fall over the next two weeks. It reached a low of $560 on 8 March. During this period, I bought another 200 shares to average down my cost. 

When Tesla reported its 1st quarter delivery, which exceeded the forecasts of most analyst, I added another 100 shares.

My total holding is 400 shares at an average cost of $649.

Tesla stock price stayed below $700 for several days after the strong delivery report. I was disappointed, but I kept fully invested (i.e. 400 shares) while monitoring the stock price closely every night.

An analyst from Canaccord gave a strong upgrade to Tesla on Monday 12 April which pushed the price above $720. The price jumped to $762 on the following night. 

https://www.cnbc.com/2021/04/12/canaccord-genuity-upgrades-tesla-to-buy-and-raises-price-target-to-1071-on-battery-innovation.html

At $762, my 400 shares now show a paper gain of $45,000 USD.

See the chart below for the price trend during the past six months.

Here are the lessons from this journey.

a) I was prepared to sell all the holdings when the stock went above what I consider to be the upper range of its value.

b) I was prepared to be patient and wait for the stock to come back to the lower range of its fair value, say $650. 

c) I was prepared to hold on to the shares when it is at a reasonable value.

d) Luck plays an important part, but it is helpful to have an understanding of the acceptable price range. At the lower end, I am prepared to increase my holdings. At the upper end, I am prepared to sell some or all of the holdings.

What is my assessment for Tesla, now that it is now at $762? 

I am prepared to sell some of my holdings when it pass $800. I will monitor the situation closely and may sell all my stock when it pass $900. 

Over the long term, some bullish analysts predict that Tesla stock price can reach $1,500. I prefer to take my profit at $900 (or slightly higher) and wait for a price correction to reinvest in the stock.

This video explains the big move in Tesla stock after the release of the 1Q delivery numbers.
https://www.youtube.com/watch?v=xKGginTnHAs

Tan Kin Lian