What Would $100 in Tesla Shares Bought 3 Years Ago Be Worth Today?

Tesla Inc. (TSLA) has captured the fascination of investors and critics alike with its meteoric rise and innovative strides. This article aims to provide a detailed analysis of Tesla’s growth, contextualize its stock performance over the past three years, and offer insights for potential investors considering Tesla as a part of their portfolio. Using technical analysis tools and understanding macroeconomic impacts are essential to derive long-term advantages from such investment decisions.

Introduction

Overview of Tesla’s Growth: Tesla, founded by Elon Musk, has revolutionized the electric vehicle (EV) industry and expanded its footprint into energy storage and solar products. Its market capitalization has skyrocketed, reflecting investor confidence in its growth narrative and technological advancements.

Purpose of the Article: This article seeks to provide an in-depth analysis of Tesla’s stock performance over the last three years, evaluate the value of a hypothetical investment, and project future prospects while considering the prevailing macroeconomic environment.

Historical Context

Tesla’s Stock Price Three Years Ago

Date Consideration: Three years ago, on October 2018, Tesla’s stock price was trading around $50 (adjusted for the stock split).

Price Analysis: At this period, Tesla’s stock was significantly undervalued by today’s standards, as it was before the onset of its parabolic rise driven by consistent deliveries, profitability milestones, and increased market adoption of EVs.

Market Conditions at That Time

Economic Environment: In 2018, the global economic landscape was characterized by geopolitics such as the US-China trade war, moderate growth among developed economies, and ongoing shifts towards technological adoptions.

Industry Trends: The EV market was still nascent with considerable skepticism surrounding its mass adoption. Major automotive giants were predominantly focused on internal combustion engines, giving Tesla a pioneering advantage.

Investment Analysis

Calculation of Investment Value

Initial Investment Details:

• Amount Invested: $100
• Number of Shares Purchased: Given Tesla’s price at approximately $50 per share (post-split), $100 would have allowed the purchase of around 2 shares.

Current Stock Price:

• Latest Price Update: As of the end of October 2021, Tesla’s stock is trading around $800 per share.
• Price Change Analysis: This represents an increase of 15x (or 1500%) in stock price over three years.

Total Value Calculation

Simple Calculation Method: The 2 shares purchased at $50 each are now worth 2 * $800 = $1600.

Percentage Increase:

The return on this investment is calculated as:

$$
((1600 – 100) / 100) * 100 = 1500%
$$

Long-term Perspective

Tesla’s Performance Over the Last Three Years

Key Milestones: Over the past three years, Tesla has achieved several production milestones, entered new markets (e.g., China with the Gigafactory Shanghai), launched new models (e.g., Model Y), and reported consistent profitability.

Comparative Analysis with Competitors: Tesla’s market cap has surpassed traditional automotive giants like General Motors and Ford. Despite their aggressive EV plans, Tesla’s technological edge and brand value have created a dominant market position.

Future Outlook

Analyst Predictions: Many analysts remain bullish on Tesla’s long-term prospects citing its leadership in EV technology, autonomous driving, and energy solutions. Price targets vary, but some place it well above $1000 in the next one to two years.

Challenges Ahead: However, Tesla faces several challenges including supply chain constraints, increased competition from traditional automakers ramping up their EV efforts, and regulatory hurdles.

Considerations for Potential Investors

Risk vs. Reward in Trading Tesla: While Tesla offers substantial growth potential, it is also highly volatile. Investors must weigh the potential rewards against the risks of significant drawdowns.

Diversification Strategies: Given the risks, diversification becomes crucial. Investors might consider balancing their portfolios with other sectors or stocks to mitigate Tesla-specific volatility.

Timing the Market: Timing plays a critical role in maximizing returns. Potential investors should consider macroeconomic indicators and technical analysis trends to make informed decisions.

Conclusion

Summary of Findings: An initial investment of $100 in Tesla three years ago would have grown to $1600, representing a 1500% return. Tesla’s performance reflects its leadership in innovation and market disruption despite considerable challenges.

Final Thoughts on Trading Tesla Stocks: Tesla remains a compelling play for growth-oriented investors who believe in its vision and are prepared for the volatility. Continuous monitoring of market trends and macroeconomic factors will be critical to derive sustained advantages from investing in Tesla.

By considering the detailed insights and informed predictions herein, investors can take a more nuanced approach to trading Tesla, leveraging both technical analysis and an understanding of the prevailing economic environment.