Todd Gordon of TradingAnalysis.com thinks that Tesla stock will drop when they report earnings today. He cites a few technical indicators that help him come to this conclusion. First, he sees the stock price is threatening uptrend support. He also notes that there is rising volatility in the stock, mainly due to investors placing more options on the stock.
While long term he is bullish on Tesla stock , he feels that come earnings, the stock is going to drop. As an investor, what should you do if you own Tesla (NASDAQ: TSLA)? What if you don’t own it? Should you be a buyer here or a seller?
Below are 5 reasons this stock will be around for the long term and why you need to invest in this company.
5 Great Reasons To Own Tesla Stock Long Term
Ask anyone about Tesla stock and you will get one of two opinions. Some people will note that the stock is vastly overvalued using just about any valuation method. They will also note that the company is spending cash like it is going out of style.
On the other hand, you have the people who like the stock. They see the company as an industry leader. As we transition away from fossil fuels to electric and hybrid car technology, some see Tesla as the company best poised to succeed and survive.
For a while I was in the camp of the stock being overvalued. But, I see the many positives and possibilities for the future for Tesla stock. So here are some reasons why long term, I am bullish on the stock.
#1. Loyal Customers
Talk to any Tesla owner and they are rabid with excitement over the brand. Most, if not all, will tell you that they will only buy Tesla vehicles in the future. The process of owning a car is simple, from buying to maintaining it.
When you have customers this loyal, you know that you are doing something right.
#2. No Haggling Prices
Unlike traditional car dealers, Tesla sells direct to consumer. You can either customize and buy online or you can walk into a retail store and buy a car that way. You build the car to your specifications, see the price and either buy or don’t buy.
Many customers love this strategy as they hate going to haggle over a car price. They never know what is a good deal and what isn’t, and with the incentives and kickbacks dealers get, a truly good deal is elusive for most buyers. Not so with Tesla. You pay what you see. End of story.
#3. Opportunity To Grow
The future looks stunningly bright for Tesla. At the moment, they have 2 cars and an crossover on the market. They can still add in more cars, SUVs, and even trucks to their lineup.
Then there is the potential for self driving cars. You could take a taxi or Uber in a self driving Tesla. You might see self driving trucks on the highway. This is a possibility and Tesla is leading the way here.
And then there are non-automotive ideas the company is working on. They want homeowners to have solar roofs so that they can go off the grid. They also want people to have the option of having large battery packs at their homes for electricity.
In all, the future is bright for Tesla.
#4. Forward Thinkers
As you can see in the above point, there is no idea that is crazy to Tesla. If it makes sense and there is a potential market for it, they will try it. Just look at their attempts with SpaceX as an example.
The company is forward thinking. They want to see how they can change the world for the better, not just profit on how things are today.
#5. Excellent Brand
Great customer loyalty comes from having a great brand. And the Tesla Model X was rated as the safest car ever tested. When you can claim this, you will immediately get press and people talking about you. If the company can continue to produce high quality cars and other products as they expand their portrfolio, the future is bright for the company.
Overall, the future is bright for Tesla stock. They have a lot going for it. Is the stock price overvalued? Yes it is. But the stock is volatile as I mentioned at the start. So if you can get in when it pulls back, you can enjoy the ride.
And who knows, you might even be able to pick up some more shares in the future when there are other pull backs.
It will be interesting to see how the stock reacts to earnings today. Some expect a large pop while others are expecting a large drop. If it is a drop, get some shares at a discount!
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.
Recent Posts from Modest Money