Tesla Mid-Year Update

New Video: TSLA Multiple Buy Signals

Our Initial Premise, Dec 7, 2019

We have been trading Tesla hard since last December, likening it to buying Apple at the time of the introduction of the iPhone on June 29, 2007:

"On June 29, 2007 Steve Jobs introduced to the iPhone to the world. It was a seminal achievement in communications, social media and commerce and it went on to reward Apple shareholders with a 1,500% gain over the next 12 years. From its humble beginnings in the late 1980’s Apple has returned 21,150% to its early believers, those who had the vision to invest in the gifted innovation of Steve Jobs.

"On November 23, 2019 Elon Musk introduced to the Cybertruck to the world. From its unveiling, an estimated two years before full production it is a game changer, not just for pick-up trucks, but for personal and commercial vehicles in a myriad of categories, i.e., the restructuring of global transportation as we know it. Cybertruck represents a tipping point for not just 12+ million light trucks sold a year [2018], but vans (500,000 sold a year in US), autonomous driving, the expansion of ride share, commercial fleets, local government and the military, all falling within the purview of a cheap, efficient and durable mode of transportation, all at the forefront of a green revolution in the creation and use of energy. Hyperbole? Only if in 2007 the new iPhone was just another cell phone."

Tesla Cybertruck pre-orders rise to over 650,000.

 

AAPL=TSLA=AAPL=TSLA=AAPL=TSLA

Stock Price

In the nine months since first suggesting Apple parallel TSLA shares climbed from $350 to $969, then fell back to $350 (March lows) and soared back up through $1,000 like a hot knife through butter, closing this weekend at $1,650. This month the Board of Directors authorized a 5 for 1 stock split effective August 21st, continuing to mirror the Apple trajectory: APPL split 7 for 1 in June of 2014, after 2 for 1 splits in June 1987, June 1985, June 1987 and February 2005. It can be safely assumed that this will first of several TSLA stock splits during Tesla's exponential growth in the coming years. While AAPL is trading at $450/share, its split adjusted price at its IPO is now $0.39. After this 5 for 1 split, TSLA's split adjusted IPO price will be about $4.00. To get to $0.39, TSLA will have to rise 10-fold from here, the equivalent of about $16,500 per share at pre-split prices, which maybe not so coincidentally is right in the wheelhouse projections of the two most prominent and vocal TSLA analysts, Ron Barron and Catherine Wood. 

Missing Out On Tesla Stock: The Biggest Mistake You'll Ever Make

TSLA Calls

"If only I knew then what I  know now." Groundhog Day opportunities don't come all that often, but we do have one now and the only way to trade it...is to trade it. 

On Dec 9, 2019 we recommended buying the Jan 2021 $420C at about $35, i.e., $3,500 per option. Those calls are trading today at $123, i.e. $1,233 per option, i.e., $123,300 per option. 

That particular opportunity may not present itself again (although it did four months later in March, 2020 when TSLA dipped back to $350 for about one second during the market's "panic" decline in March), but on its way to a 10X increase in valuation there will be more opportunistic entries for the long term as well as numerous short-term runs similar to what we have seen in the intermediate and short-term models year-to-date. In nine months of trading TSLA calls, we can project that one out of four will fall flat on its face, one out of four will be just OK, and two out of four will result in outstanding triple and/or quadruple digit returns. 

Premium Service TSLA Trades - Dec 2019 - August 2020

 

 

The key take-away is that throughout the past 9 months there have been a lot of trend following trading signals to the upside. The essence of a long term trend, as saw with AAPL over the past decade, is that in the end it doesn't matter on a trade by trade basis if one works or not. As a whole, Buys will payoff and the longer the trend, i.e., 2-4 years minimum with TSLA, the more likely a stable of winning trades will be garnered by a disciplined trend following trading system. 

What makes it likely or even possible that TSLA will keep rising in this strong and dynamic an uptrend? That is where the original TSLA = APPL parallel comes in because if you believe in that premise, then the logical extrapolation is that over the exponential rise in market cap and stock price that there will continue to be these kinds option wins over losses over the course of the next 24-48 months. There will be stretches like we saw in March, where a general market decline will generate a series of bad trades. But those bad trades will be more than made up for by series' of stellar trades as TSLA moves forward with its growth, innovation and the disruptive evolution of clean energy across global transportation markets. 

If this analysis is right, or even close to right, Tesla the company will not be the only game changer, trading our trend trading strategy will be a game changer for individual option accounts.

Nine months ago TSLA was $350 and my target was $1,000 by the end of 2020. I had to change that target to $1,500 in May, and now with TSLA at $1,600 mid-August, am raising it to $2,500 (pre-split) by the end of December. Come Battery Day on Sep 22nd no doubt it will have to be raised again, by how much I will not know until Sep 23rd. The stock is doing all of the heavy lifting here, our only job is to have the conviction to follow the trades.