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Tesla seems to be an all-weather stock. It could still remain a leading stock during this turbulent period for several reasons. Despite the recent fall, today TSLA is up.
Tesla Inc (NASDAQ: TSLA) stock seems to be a great choice during downtrends. This is because the stock price turns out to do better under pressure. This particular characteristic has been monitored by both fans of the stock and foes alike.
Tesla (TSLA) surged by about 23% last week. One thing to note though was that though prices weren’t steady, TSLA seemed to be poised for a bull run.
Tesla (TSLA) Stock Price Is Set to Go Up
A leading school of thought is that Tesla (TSLA) stock price forecast yearly average to be at $502.13. This puts Tesla’s current stock price to be within the same ballpark as many analysts’ predictions (and even higher). At the time of writing, TSLA is trading at $528,52. It means that the stock is 5.25%up today while the market cap of Tesla is 97.32 billion.
Last Quarters’ reported numbers provide insight into what the future may look like. This is critical considering that the automaker is expected to release its quarterly earnings in the third week of April 2020.
There are several reasons why this may be happening.
Currently, analysts have calculated Tesla’s Enterprise Value to EBITDA to be at 48.53. This means a lot considering that this is one of the American auto industry’s lowest figures. The traditional competitors have a higher Enterprise Value to EBITDA than the electric vehicle maker. This means that the company is currently undervalued.
The intellectual property that Tesla is sitting on has far deeper implications than can be seen for now. This is because the homegrown tech that drives the automaker is also its saving grace.
Elon Musk and his team have had to develop almost everything from scratch. This is a unique approach to vehicle manufacturing. It allows for the kind of innovations that may not seem unique at first but are way ahead of the curve. As the EVs begin to trend Tesla will most likely remain the undisputed leader in this industry.
COVID-19 Affects General Business
A return on equity of -10.75% says quite a bit on the current ability of the management to provide returns to shareholders. One recurring theme across the board in all industries at this time is the COVID-19 situation. Returns may not be possible for some time until things clear up. However, this ratio from the last quarter already shows that the company itself is yet to cash in on its innovations.
It doesn’t mean though that the management is incompetent (though Elon Musk isn’t your regular CEO).
It just means that the EV automaker may also be following a disruptive cycle. And it may be nearing its end as external factors suggest. The U.S. economy may enter a recession due to COVID-19. Even if it doesn’t, previous cashflows for consumers won’t just be available. Electric Vehicles will provide consumers the ability to own cars without the need for fuelling them. This will be Tesla’s strongest selling point.
As such, it appears that though prices are experiencing volatility, the Automaker is prepared to take the markets by storm.