The Tesla brand has certainly been in the headlines recently, having invested a hefty $1.5 billion in the cryptocurrency Bitcoin.
The electric car brand is the latest high profile venture to make such an investment, with CEO Elon Musk announcing that he expects to begin accepting digital and crypto payments for its products in the near-term.
Even prior to this announcement, Tesla has experienced significant growth as a brand, attracting the attention of investors from across the globe. But is Tesla still a good value investment in 2021?
How Tesla Outperformed the S&P 500 in 2020
Despite the impact of coronavirus and the record-breaking volatility that it brought with it last year, the S&P 500 index (which is a key indicator of North America’s wider economic performance) ended 2020 by making double digit annual gains.
Large cap brands like Tesla played a pivotal role in this, of course, but Musk’s innovative company actually recorded far larger gains in the 12 months ending December 2020.
More specifically, Tesla’s share price increased by a staggering 616% during this period, with the company climbing the list of publicly traded US brands to reach seventh and Musk himself emerging as the second-richest person in the world.
There were various reasons for this, of course, not least the company’s highly publicised ‘Battery Day Event’ in September of last year.
Here, Tesla announced plans to produce table EV batteries in-house, with these entities expected to improve range by 16%, boost power by a factor of six and reduce the long-term cost of buying a Tesla.
This instantly raised the prospect of increased sales for investors, driving a significant price hike that has continued well into the first quarter of 2021.
But is Tesla Still a Good Option for Investors?
While Tesla’s impressive growth rate may be extremely alluring, the question that remains is whether the brand remains a viable option for investors at such an inflated price point?
On February 21st of last year, for example, the price of a single Tesla share was just $180.20. Just one year later, this has increased to $781.30, while a high of $880.02 was achieved as recently as January 8th.
It’s not clear how much more scope there is for the share price to rise, particularly with the aforementioned battery announcement triggering a seismic increase from $408.09 on November 16th of last year to an incredible $649.86 just four weeks later.
This represented growth of more than 50%, with the share price scaling incrementally in the weeks since.
Another risk for Tesla is posed by the company’s physical income statements, which haven’t increased at the same rate as the share price. This is typical of large cap stocks, as investors usually give hypergrowth entities a pass when it comes to profitability.
However, if the firm’s income statements and balance sheets begin to matter, investors will be forced to consider the fact that Tesla is a $568 billion company that continues to hemorrhage money.
One way to hedge this risk when investing in Tesla is by trading the Nasdaq index through a CFD on your chosen forex broker.
This affords you access to a diverse range of assets and markets, while also enabling you to capitalise on Tesla’s share price growth (and that of similar tech companies).