Tesla, which was among the surprise growth stocks in 2020, reached record highs despite some analysts’ belief that the company was overvalued. Despite the 2021 correction and its impressive 2020 growth, investors have recorded a positive return-on-investment (ROI).
According to Finbold data obtained, Tesla stock saw a 224.93% ROI between June 2021 & June 2020. It was higher than many of its major competitors. Tesla was second only to China-based NIO, which saw almost twice the returns at 539.13%. General Motors comes in second at 152.28% and General Motors at 141.08%. Volkswagen AG is fifth at 116.62%.
Tesla’s stock price increased from $191.95 in 2020 to $623.71 by 2021. NIO’s stock prices were at $6.9 in 2018, while NIO’s was at $44.1 as of June 2021.
Tesla Stock is Driven By Fundamental Factors That Drive Significant Returns.
Tesla’s stock performance has been mixed over the last twelve months. It soared to record highs during the pandemic but plummeted in the wake of the coronavirus economic recovery. Important to note is that the vast gains made despite the slump were sufficient to sustain high ROI. The main factors that drove the Tesla stock growth were the increased interest of retail investors and the S&P 500.
The company also increased production to keep its market leadership in EVs. It launched the Model Y compact SUV in 2020. It served one segment that is growing at the fastest rate in the auto sector. Tesla also had a firm grip on China’s lucrative market when it began production at its Shanghai facility in the latter half of 2019. The production was synchronized with a recovery on the Chinese EV markets from the pandemic, despite NIO operating there.
Tesla’s innovative Cybertruck model seems like it is working in the company’s favour. As of May 25, 20,21, the estimated cybertruck pre-orders totalled 1.08 million. It was interesting to note that the pre-orders were more outstanding than the 866.750 total Tesla vehicles delivered in 2020 and 2019.
Additionally, Tesla’s focus on improving the technology of its vehicles played a significant role in its stock price returns. The company is primarily focused on software advancement and battery advancement.
Tesla has been the centre of attention since the shift in focus to the climate change agenda. Investors are now betting more on the company. As an industry leader, Tesla is also benefiting from legislation that encourages consumers to choose electric vehicles.
Effects of Elon Musk’s Cryptocurrency Involvements in Tesla stock
Elon Musk is Tesla CEO. His involvement in cryptocurrency could have had a mixed effect on the company’s stock. Tesla invested in Bitcoin early this year, helping to propel the cryptocurrency to record highs. Notable is that Bitcoin is among the assets that have seen significant ROIs over the last year. Tesla’s investments as a pioneer institution appealed greatly to cryptocurrency-friendly financiers.
On the flip side, Musk’s apparent flipflop regarding Bitcoin was accompanied by the company cancelling that asset as payment. It could potentially impact the stock. Some customers were allegedly forced to cancel Cybertruck reservations due to Musk’s decision not only to abandon Bitcoin but also to choose altcoins like Dogecoin.
While Tesla remains the leader in EVs, the company is at risk of losing its market share to other players. General Motors and Ford in the USA are increasing their EV offerings by introducing models comparable to the Cybertruck.
The company already dominates the Chinese market, so it cannot overlook local competition (including NIO). After it was reported China’s monthly net order dropped to 9.800 in May, its stock price fell.
The global shortage of semiconductors is the reason for the decline. Tesla must make sure deliveries follow the planned schedule to preserve its impressive return.