$TSLA Tesla vs $IBB Biotech over 7 years

21 Mei 2019

The pioneers in medicine (IBB Biotech) vs the pioneer in automobile, battery and automated driving (TSLA, Tesla).

Notice the wave of investor recognition of the future of biotech from 2011 to 2015 matches quite well to the wave of investor recognition of the future of energy storage and EV vehicles in the stock price of Tesla.

Biotechs returned to the US Presidential Election level and Tesla has also pulled back to the level this week in the low 190's (chart to follow of the exact level). The US President supported faster drug approvals if lower drug pricing was on the table.

The President of the US hasn't done anything to support the efforts of EV's and in fact hasn't been a believer of solar and alternative energy.

It's curious that TSLA is pulling back to the Presidential election price level in the low 190's were we have seen the lows this week on the various Wall Street downgrades. Oddly, Wall Street was upgrading TSLA at the highs near $370-$380 last year . If you want to make money in stocks long term, be aware that Wall Street tends to get it wrong more than most people think. If you follow Wall Street recommendations, realize that analysts are typically reacting to old news and not regarding or weighting the potential for positive future news which will weigh more in the minds of investors. Wall Street is more concerned about having another Enron (fraud) and melt-down on their hands, so any company having short term difficulties is sold out of fear.

Full disclosure: I follow Tesla on an intraday basis and have for many years. I have positions in TSLA and will trade in and out of shares as I see opportunities to enter on bad news and exit on good news.

We discuss Tesla quite often in the Key Hidden Levels chat room where we discuss "EARNINGS LEVELS", "NEWS LEVELS", "TIMEmode TREND" and assorted sentiment and liquidity indicators like SSKEW and VIX to pinpoint entry/exit levels for stocks and the market overall.

Tim West
12:04PM EST, May 21, 2019

21 Mei 2019

Nota

184 to 197 on November 8th-9th

22 Mei 2019

Nota

Elon just bought $35 million more TSLA shares yesterday (Tuesday, May 21, 2019), in addition to the $25 million he bought last week in the 2ndary offering at $243. I know there are people and hedge funds who like to squeeze margin longs and try to break them by gunning stops by breaking a stock, but I don't see that happening this time. I plotted all of his purchases on my charts that I post in the chat room. I'll just guess that on average he has purchased most of his stock in the high $200's. (I'll calculate another time).

Here's what gives me some sense of calm: Elon's stake in SpaceX could be worth more than $TSLA.

More calm from the concept that there are many billionaires who are rooting for TSLA and even a new one Google founder Larry Page (read the news stories). Larry Ellison is an investor and a big fan. Apple could easily buy TSLA too.

More calm from the idea that the supercharger network is worth something around the world: Perhaps $5 billion to take a guess.

More calm from the idea that Tesla is really a battery manufacturer that makes more batteries than the rest of the world combined. The car is just one use for those batteries. I am going to buy a battery to run my house next that I download cheap energy at night and use it during the expensive daytime. The battery will pay for itself in a few years just with that arbitrage. If I add solar panels by Tesla, it would be even more interesting.

The value of TSLA is perhaps as low as $20 billion until the China Gigafactory is up and producing (versus $35 billion now at the $200 price level) China sells more cars, 28 million in 2018, than the US in a year. If China is making hundreds of thousands of cars each year and making at least $3,000 profit per car, that is 300,000 x 3,000 or $900,000,000 or nearly $1 billion. So in that instance TSLA is trading at 20 times expected earnings in a year, but growing quite strong. I'm putting in 300,000 cars for the US market. This excludes Europe, which might be another 300,000 cars each year. Competition might dent that number over time.

All in all, TSLA has been overvalued for a long time especially when it hit $60 billion valuation on only $2B-$3B in sales back in 2013-2014, but then again so is almost every other stock in the market. Look at $NFLX.... bleeding capital ..... huge valuation.

If someone could do Elon's Average Cost Basis of Public Stock Purchases, that would be great. Post here.

Tim

May 22, 2019 10:55AM EST

1 Jun 2019

Nota

What people DON'T SEEM TO REALIZE is that TSLA was EXTREMELY OVERPRICED when it was a momentum stock and people kept paying higher and higher prices "just because it was going up". That process of mindless buying of stocks just because of a price pattern and disregarding ALL FUNDAMENTAL INFORMATION is what causes great dislocations of stock prices to economic reality.

It sure is a great thing if you owned shares of TSLA and they appreciated far beyond imagination when it was $60+ Billion in market cap and only a $400 million - $2 billion in sales in 2012-2013. That's irrational, but it's what happened.

MSFT reached the same insane level of valuation in the year 2000 and it took 16 years for it to exceed that peak, but at no time from 2000 to 2016 did anyone ever declare that MSFT would go bankrupt or did the shorted shares reach 30% of the float, but their business model has been challenged constantly from all angles and they survived threats from the internet (Gates thought the internet was a joke for many years and even wrote a book about his disinterest of the internet), Linux (the free operating system sure to destroy Microsoft, or so they said).

What's my point? Great companies adapt. If the company is 'customer-centric' then they will come up with a new product or service to meet the demand. That's just what great CEO's and great Boards of Directors push to have happen.

As for how this relates to stock market patterns, maybe Donald Trump will look at all of the companies whose stock price is back down to or below the level where it was when he was elected and see that things are getting rapidly WORSE and it's time to get things done.

Have a great weekend.

Tim

June 1, 2019. 2:30PM EST

20 Jun 2019

Nota

Almost 3 weeks later and Tesla had a decent bounce in price from my last update.

Tesla announced nearly a 400 mile range car - sure to please everyone who has range anxiety.

Tesla has rapidly increased the speed of charging - also to reduce nervousness that people have when using an EV to go long distances.

Gigafactory 3 is going up extremely fast which shows us what people are truly capable of. Eager to see cars come off the line there by year-end.

Quarter 2 is coming to a close and another cut in the tax rebate for EV purchases happens from $3750 down to $1875 on July 1st.

June options expiration is Friday, June 21, so look for a big strike price to attract the stock price where the most people lose all of their money.

June 20, 2019 5:14PM EST

4 Sep 2019

Nota

IBB and TSLA have moved in a very similar fashion since the chart was published.

Tesla has had plenty of news too:

1. China wont charge a 10% sales tax on Tesla vehicles.
2. Production at GF3 is coming along at a very quick pace, according to Musk.

Economically speaking -
1. Interest rates are extremely low as investors move to safety over growth
2. Energy prices are low (recession fears and weaker demand, production cheats)
3. Inflation is very low (global overcapacity still)
4. Trump trade wars with China continue
5. Media focus on recession fears - scaring investors out of cyclical stocks

September 3, 2019. 11:32PM EST

5 Nov 2019

Nota

The pattern continues....
There are people that invest in "the past", "the present" and "the future".
Clearly we know where Tesla falls in that schematic.
Well, Biotech has recently found some strength and had some good news, as has Tesla.
Tim
November 5, 2019 2:29PM EST