Stock of the Week: Tesla
Stock of the Week: Tesla (TSLA)
Which Generation? Builder
NOTE: Wilson Wealth views the accumulation of wealth over three generations
1) Builder 2) Grower and 3) Sustainer. We consider this stock a wealth building stock.
3 Questions to Consider
Will your grandkids drive a gas-powered car?
Is an electric car better for the environment?
Will corporate America focus on making environmentally friendly product in the future?
Cool like Apple
As with the computer company, Tesla occupies a space in the public's mind that transcends the mere nuts and bolts of creating a product. GM manufactures cars: Tesla makes experiences. Customers buy this experience, and they are willing to pay a premium for it, which is excellent for the stock.
The iPod Effect
At one point, Apple's founder, Steve Jobs, was forced out of the company, and the CEO at that time sought a buyer for Apple. The reason? Apple was a great story, but not a great company. They had yet to create a product that could sell. Then Jobs returned with the iPod concept, and the rest is history. Tesla's Model 3 appears to be their "iPod." As of March 2020, it is the best-selling electric car in history.
More Power, Please
Twenty years ago, if you were in an airport or hotel lobby and your phone died, you were out of luck. Today's business traveler has several outlets available in their hotel or airport terminal to plug in their cell phone charger. Currently, electric car drivers do not have many places to charge their cars when traveling. America's need to upgrade its power grid will include creating more locations for electric car drivers to charge their vehicles. A by-product of this will be increased purchases of electric cars, a development that should benefit Tesla.
Much has been made about Tesla's eye-popping stock return for 2020, but do not lose sight of the bigger story. Tesla is up over 1,500% from it is 2010 debut through the end of 2019. Amazon had a similar year, where the stock gained over 100%. This massive gain was before Jeff Bezos introduced Amazon Prime. If Tesla continues to innovate similarly, the results should follow.
Every two weeks, Wilson Wealth will feature a stock; we call this our Stock of the Week.
Intended for informational purposes only. Clients are encouraged to contact their Wilson Wealth advisor if they wish to act on this information. Likewise, if you are not a Wilson Wealth client, please consult with your financial advisor before changing your investment strategy.
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