How to make money from Tesla Stock

lipkarlock Saturday, March 13, 2021



One of the hottest stock recently is Tesla (NASDAQ: TSLA) stock.

Tesla stock has been on fire since early 2020.
As of now, it is priced at USD693.73 per share.

Tesla was founded in 2003.
Since then, it is always making loss each year.
Until 2020.

2020 is a a special year for Tesla, as it start to generate positive net income.
This consider a new breakthrough and very positive news for Tesla.
Finally, Elon Musk has made it after so many years.

In 2020, it earned USD721 million.
It sold 500,000 cars in 2020.

Quoting the below from Tesla Annual Report:





Tesla Model Y production at Gigafactory Shanghai started in December 2020.
Updated Model S and Model X also launched in January 2021.




Total revenue grew 46% YoY in Q4. This was primarily achieved through substantial growth in vehicle deliveries as well as growth in other parts of the business. At the same time, vehicle average selling price (ASP) declined by 11% YoY as Tesla product mix continued to shift from Model S and Model X to the more affordable Model 3 and Model Y. 

Tesla operating income improved in Q4 compared to the same period last year to $575M, resulting in a 5.4% operating margin. This profit level was reached while incurring SBC expense attributable to the 2018 CEO award of $267M in Q4, driven by an increase in our market capitalization and a new operational milestone becoming probable. Positive impact from volume growth and regulatory credit revenue growth YoY was mainly offset by lower ASP (including price reduction of China-made Model 3 and price reductions of Model S and Model X before the introduction of updated models) but also by a series of notable items. These included a portion of Q4 SBC charges, vehicle warranty accruals, additional supply chain costs, Model S and Model X changeover costs and other items. 

Quarter-end cash and cash equivalents increased to $19.4B in Q4, driven mainly by Tesla recent capital raise of $5.0B (average price of this offering was ~$632/share) and free cash flow of $1.9B, partially offset by early debt repayments (early conversion of convertible notes).  



Below is the chart showing the market share of Tesla in US/Canada, Europe and China.
Even though it is still quite low now at 1.4% for US, it is slowly picking up in market share.


Why people like Tesla car?
Because it is different.

The look of car is very futuristic, and also creative.
The simplicity in design really goes well with the demand of the market.
It is no surprise that there are so many followers out there.
People just love Tesla car.


Will Tesla continue to be profitable?

We need to monitor closely.
If the sales of car in 2021 turns out according to the expectation of 700K cars, then I think Tesla will continue to be profitable.
That is 50% more car sales vs 2020.



The volume has been so high



And who can ever forget Tesla Cybertruck.
It is so stunning.
It is either you like it, or you despise it.



Tesla as Investment

For now, I do not invest in Tesla stock yet.
I need to see more consistent net income for the coming 4 more years.

The electric vehicle (EV) market can a  competitive market.
Even though Tesla is one of the leading EV provider, more competitors will come into the picture.

Note that however, EV will grow by about 20% to 22% CAGR until 2030.


Selling Put Options on Tesla Stock

Tesla stock has been quite volatile.

The beta of Tesla stock is at 2.03.
This is double of the market.

Look at the PE ratio!
It is insanely high at 1125!

The PEG Ratio is also high at 34.75.



The volume of Tesla is at 33 million.
It is very high.
There are so much interest from traders for this stock.

For now, I just did some options trading in Tesla.

I sold a cash secured put for Tesla stock, with the strike price of USD 490.
Expiring on 17 Sept 2021.
If the stock do not retrace below USD 490 per share by 17 Sept 2021, I will keep the premium as extra income.

The current stock price is USD 693 per share.
So it need to drop by another 29% before it hit the strike price.

If Q1 of 2021 hit another profitable quarter, I believe the stock will increase again.
If I can collect about USD 200 (my target profit), I will close the trade.

Will need to monitor this.


Happy Investing and Trading! 😉

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