Follow up on Tesla investment

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This is follow up on the "Tesla investment" post. Will do a retrospective on it.

The blog was posted April, 23. And the shares were bought a day later. Before that there was good several weeks of trying to figure out how the brokerage system works. There for sure are many options both local and worldwide. Each comes with its advantages and risk. I am in no position to comment on this. I signed up with "Elana Trading" a local bulgarian broker (and it seems respected), for the simple reason that it has offices where I work. Not a great reason - but that is it. International stock come at 15$ charge (minimum) on opening and the same amount on closing.


So having chosen a broker, I gathered my thoughts into the blog, and bought the shares. Each was $264 including the brokerage fee per share.

What I did not realise is that this was only few days before Q1 2019 earnings results. Very nooby! As it turns out - notwinstanding much I love the company and the product - the winter quarter is generally weak for the auto sector. I did not know that. Tesla missed estimates, and posted another loss (after previous two quarters being positive). From there on - the stock continued to fall.



The low point was in the beginning of July, where I questioned all my motives for a successful company. The shares have gone down 35% in a matter of several weeks. I started reading the $TESLAQ opinions, and wondering if they know more than the Tesla fan boys that are so active on YouTube.

Warren Buffet says if you believe in a company - when the prices fall you have to be happy and buy more on discount. But this is only if the company does not fail in the meantime, right? So I did not buy at $180. The Gigafactory Shanghai was progressing impressively, and was not reflected at all in the sentiment, nor in the stock price. It was months if not years away from any production start, by the popular opinions at that time (which in the fall turned out to be the greatest surprise).

During the whole of summer 2019 the price zigzaged above $180 but stay well bellow my entry point (except one day in July where it touched the entry point). The Q2 performance of Tesla was also very bad. With even bigger losses than Q1. They started to deliver cars in Europe, China and Japan.

Then Q3 was surprise to everyone. Record deliveries and and positive net income! Prices shoot above $300. After several months on deep red, for the first time this trade became green. What to do now? The psychology of the last half year weighted on my - and I sold at $317 for 20% profit on this trade.

And the rest is history. Giga Shanghai opened and started producing cars agains all expectations. People seemed to want to buy Tesla's, even though the green credits were expiring. Tesla stock price reached near $1000! Which would have been 400% increase on my opening price.


Conclusion

I consider myself very lucky to have stayed for the 6 months in deep red until the trade became positive. During this time, I learned a lot about how to value a company. Maybe it is for the better that the experience was not with 4x gain. It made me humble, that I do not know myself, and do not know the market and how valuing a business works.

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