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LBLV analysts: “The increase in Tesla’s quotes can be called completely justified.”



The dynamics of Tesla securities differ significantly from the quotes of other automobile brands. Since the beginning of 2020, the company's market capitalization has almost tripled, while traditional car manufacturers continue to struggle for survival. The reason for the weakness of most corporations is the fall in demand, says LBLV financial analyst Alexander Melnikov.



Amid the coronavirus pandemic, there has been a sharp decline in consumer spending. Now people give preference to high-tech cars that are superior to competitors in a number of parameters.



Market Trends: How Are Tesla Shares Trading?



If a year ago Tesla's assets were selling at $235, now it will take at least $1,200 to purchase a security. Over the past 12 months, the corporation's market capitalization has increased several times. In 2019 it was about $40 billion, but now it reaches 224 billion.



Last week, the capitalization of the electric car manufacturer increased by $70 billion. As a result of market trading, Tesla surpassed General Motors, one of the three key US automobile brands. Over 4 trading sessions, Tesla shares rose by about 5%. Some analysts say the company's ultra-high capitalization makes no sense when measured by traditional standards. At the same time, the company cannot be classified as a standard car manufacturer, and therefore the usual calculations are not applicable in this case, LBLV experts note.



Several factors can be named among the reasons for such a powerful rally:



The company's ability to sell cars at a large profit is considered key. Elon Musk announced to employees that the second quarter of 2020 may be break-even. Despite the temporary closure of its main California plant due to the pandemic, the company was able to maintain its high status and protect itself from major losses;
An additional impetus for Tesla securities was the publication of a sales report. During the second quarter, customers received over 90,000 cars, while the average analyst forecast indicated only 83,000 cars.
According to experts at lblv.com, Tesla produces the highest quality and cheapest batteries. The main advantage of batteries for electric vehicles is the use of cylindrical cells and high-tech software. The system monitors the battery, allowing the user to monitor the battery condition in detail.



Considering the sales success and high demand for cars, the increase in Tesla's quotes can be called quite justified. The fact that 90 thousand electric cars were sold is a powerful signal for the bulls. This event becomes a reason to push shares to further growth.





The first half of 2020 was extremely unsuccessful for the bears. Now investors must understand that the company's assets are in the overbought zone, and it is time for existing shareholders to think about fixing the result obtained. The corporation is prone to sharp ups and downs, and has experienced two waves of sales since 2018. Each decline in quotes cost investors more than 50% of their trading position.



With the release of economic news, the share price rose by 9.7% and reached $1,228 per share. The rapid growth of the Central Bank has made the company extremely expensive. Currently, the P/E ratio is 320 points. As noted in LBLV reviews, today this figure is considered the highest among automobile brands.

Red shorts from Elon Musk
Tesla's official website has pleased fans with a new product - red shorts with the company logo. Elon Musk previously announced that he plans to produce this item of clothing. It is assumed that the appearance of this product in the line of an automobile brand can be considered as “trolling” of investors seeking to sell the company’s assets. Market players who have been unsuccessfully shorting Tesla stock have recently taken large losses as the stock's price surged. Despite the pandemic, the company's assets have increased in price several times.

Notably, the price of the red shorts is a reference to the past share buyback price. They are selling for $69,420, while in 2018 Elon planned to buy securities for $420. It is also worth noting that the electric car manufacturer has long been producing its own clothing and accessories. Previously, the brand's collection included a Cybertruck Icon Trucker Hat priced at $25.

The price tag of the red shorts turned out to be quite high, but the influx of buyers was not long in coming. The number of orders exceeded all expectations, and consumers literally “crashed” Tesla’s website, notes LBLV. At first, Elon Musk's tweet about the production of shorts was perceived as a joke, but soon the branded item became available to the mass consumer. Fans sold out of Musk's shorts in just a couple of days.
 
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