Tesla Motors Inc (NASDAQ:TSLA) is moving quickly to make sure that the gigafactory is ready to go when the Gen III car is. The reason for this is very simple. As Tesla CEO Elon Musk told CNBC, their main focus right now must be on making sure that the gigafactory is ready to go when they’re ready to start mass producing the Gen III car.
Tesla’s gigafactory is key
Musk notes that designing the car and then tooling up so that they can produce the rest of the car are big expenses. However, if they do all of that and then don’t have any batteries to put in the car, he says “it would be a terrible outcome for Tesla.” Musk thinks the automaker might even fail if that happens.
In his 2021 year-end letter, Baupost's Seth Klarman looked at the year in review and how COVID-19 swept through every part of our lives. He blamed much of the ills of the pandemic on those who choose not to get vaccinated while also expressing a dislike for the social division COVID-19 has caused. Q4 2021 Read More
Needless to say, that demonstrates how big of a risk it is to invest in Tesla Motors Inc (NASDAQ:TSLA) right now, particularly at the company’s high valuation. So is it really worth the risk? Of course it depends entirely on who you ask.
Tesla to be either a colossal hit or a colossal failure
Writing on Yahoo Finance, Lawrence Lewitinn shares the views of Chantico Global founder Gina Sanchez. She says she’s worried about the valuation right now but thinks that if Tesla Motors Inc (NASDAQ:TSLA) does execute everything perfectly, “it’s going to hit big.” In fact, she said a multiple of 200 times forward earnings might not even be enough.
She notes that the automaker is going to have to meet all of its targets or building gigafactories and putting Supercharger stations in place in order for its stock to be “successful.” She said it’s a big challenge for any company to be “priced to perfection,” as she says Tesla Motors Inc (NASDAQ:TSLA) is. She’s not the only one who made comments about Tesla being priced to perfection. We heard similar thoughts from analysts from RGA back in September when the automaker’s stock was trading at less than $170 a share.
Suggestions for short-term Tesla traders
Lewistinn points to suggestions from Auerbach Grayson strategist Richard Ross for how short-term investors can get in on the action. Ross notes that Tesla Motors Inc (NASDAQ:TSLA) stock has seen resistance in the downtrend since hitting its peak in February. However, he says the automaker has been sticking to its 200-day moving average “almost to the penny.”
Tesla Motors Inc (NASDAQ:TSLA) did dip in May, but the stock has bounced back, surpassing what he says is “short-term resistance around the $220-per-share level.” He thinks that this price level will offer some support in the near term in cash Tesla shares pull back at some point.
A pattern in Tesla’s long-term chart
Ross also sees a pattern in Tesla Motors Inc (NASDAQ:TSLA)’s long-term chart, suggesting that it could be useful for technical traders. Once again, he points to the 200-day moving average, saying that it has “provided very nice trading signals on a number of occasions.” He said those who like Tesla’s story also like its stock, but they don’t have much of an appetite for risk. As a result, he suggests holding a small position and not selling until it falls under the 200-day moving average, which has remained the same for nearly two years.
The strategist also said that since three tests of this average since September, Tesla Motors Inc (NASDAQ:TSLA) stock has been advancing strongly.