Why I Sold My TESLA Stocks

So I’ve got a confession to make. Earlier this week I broke one of my most important investing rules and sold all of my Tesla stock and it’s about time I explained myself.

I honestly feel a bit sad now I’m out of the Tesla club. I’ve always followed the theory that you should never try and time the market and instead just stay invested as it’s all about time in the market.

After all, if you think about it, you have to be right twice, once when you sell and once when you bought back in. However what’s currently happening with Tesla is a very unique situation.

I’m really concerned that it’ll start to implode. So let’s talk about the things that made me decide to sell, how much I sold for, what this means for you, and most importantly, your money.

All that’s coming up right after you Elon Musk. Let me start off by saying this shouldn’t be taken as financial advice and before you make any decisions yourself it’s important to do your own research.

Remember that no one truly knows what the stock market will do next. We just have to try and make educated decisions with our money. I’m also not a hater. I love my Tesla.

It’s one of the best cars I’ve ever owned. They are without a doubt such an interesting company. I mean, in just a couple of short months, Tesla has grown by over 55%. This has made Tesla more valuable than every other car company combined, which is incredible when you think about it.

If I’m honest, though, it’s not really fair to call Tesla a car company, it’s so much more than that. They’re already involved in solar power, battery technology and the future could even include a fleet of self-driving taxis.

Just imagine how cool it would be if my car could go make me money as a Robotaxi while I relaxed at home. When you combine this with a huge influence of their charismatic leader, Elon Musk, it makes sense why the company is booming and is the go-to stock for beginner investors.

I personally started investing during early 2020 at a $100 per share and until this point I’ve never sold, but when the price hit a certain point I had to reconsider my position and liquidate my stocks.

But, that’s just FUD, and you’re a paper handed pansy. We’re going to the moon. I get how it looks. I’m all about buying and holding but sometimes taking profit isn’t a bad thing.

Let me explain first, let’s talk about the fundamentals. This is kind of like buying a used car. You wouldn’t just hand over all your money without looking under the hood and inspecting the engine to see if everything was in order.

That would be just asking for trouble. Although with a Tesla I don’t think that example works very well. Not a lot to see in there.

When you dig deeper into the numbers you’ll find that Tesla currently has a price to earnings ratio of 353, which means investors are prepared to pay $353 for every $1 that Tesla makes. If that sounds a bit expensive to you, then you’ll be correct.

My traditional approach of carrying out fundamental analysis, which includes looking at balance sheets and cashflow statements to determine if a company is a good long-term investment doesn’t really work that well for Tesla as it’s all about the future of the company and not the numbers they’re currently doing.

But you’re just a boomer and these old methods don’t work anymore. I’m young and I can take the risk. Well, I do agree. It’s important to take some risks when you’re younger, however, it is best when it’s calculated and in moderation.

I’m not saying I don’t like Tesla or you shouldn’t invest. It’s just important to remember that Tesla is highly dependent on future innovation and it’s already valued higher than every car company without actually selling the most cars so it has a lot to live up to.

It’s also important to note that Tesla previously had an 80% market share when it comes to electric vehicles. However, as of late, the market share has slipped to around 66%.

I really do have high hopes for this company but saying this it’s important to look into the numbers before investing so you’re aware of how much risk you’re taking.

Elon Musk has had an unrivaled influence over Tesla stock price. Who else has the power to make overnight millionaires or cost people fortunes with a single tweet? I mean, when someone gets a new dog, it doesn’t usually end up in the creation of two new dog themed crypto coins that make multiple people into billionaires.

But that’s just the norm for Elon. On November the sixth, Elon tweeted a simple poll asking if he should sell 10% of his Tesla shares. He also promised that he would abide by the results of the poll, whichever way it went.

As you can imagine, Twitter said, yes. This was an extremely smart move as I honestly think he knew exactly what Twitter wanted him to do. What do you mean, it seems like a 50/50 vote to me.

It could have gone either way. Well, as you’re probably aware investing in the stock market is such a great way to build your wealth because you don’t pay any tax on the stock until you sell it and realize your gains.

Therefore, many billionaire CEOs hold the majority of their wealth in company stock. This means they’re paying practically nothing in tax because they technically never made anything until they sell it of course, that’s why mark Zuckerberg only takes a yearly salary of $1.

If they need money, they just borrow against their stocks and still pay no tax as well as getting stock options, travel and other forms of compensation. It’s an extremely exploited loophole. But many people don’t like this, which I can sort of understand as I do believe billionaires should pay their fair share of tax.

But coming back to Elon, he knew this was a hot topic on Twitter so it’s pretty clear which way the poll was going to go. This allowed him to take advantage of Tesla’s extremely high stock price and not look like he had paper hands for selling 10% of his shares.

Even his brother Kimbal Musk took the opportunity to liquidate some of his shares for millions. This might be great for the Musks, but as an investor this does worry me is it could cause many everyday investors to panic and follow suit, which then could spark the start of a crash.

To be honest, in hindsight this hasn’t actually impacted Tesla stock as much as I thought it would, which I’m happy about. But my worries are justified. I mean, just look at the effect Elon had on Bitcoin’s price when Tesla stopped accepting it as payment.

Now we need to talk about the Hertz deal as was the main reason Tesla stock pumped past the $1,000 mark and it could be a huge weakness. This caused Tesla to reach a $1.2 trillion market cap, which is absolutely insane.

That’s not far off Amazon’s market cap of $1.8 trillion. Well, I say not far, but you know what I mean? When Hertz announced they were placing an order for a 100,000 Tesla Model 3s, in an order totaling $4.2 billion, this caused Tesla stock to surge.

However, Elon Musk being the troll that he is mentioned on Twitter that if the recent growth was down to the Hertz deal, then this wasn’t actually signed yet.

So all this hype over something that might not even happen. Oh my God, man, I can’t believe it. I think the point he was trying to make was that Tesla doesn’t need this deal to sell cars as they will be sold whether Hertz buy them or not.

Demand has never been an issue for Tesla. It’s supply that they’re struggling with. To my surprise this didn’t have a huge impact on the stock price.

However, if a deal like this has the power to pump Tesla’s stock to the moon then I’m worried it could have the opposite effect if it doesn’t go through. Since the pandemic new investors are on the rise and the trendy thing seems to be investing in Tesla stock. This could cause big problems in the future.

The problem comes when new investors are just looking to make a quick return and therefore can’t stomach a huge loss in their money. A recent study actually showed that 46% of people that received stimulus money invested at least some of it.

And 70% of the 46% invested at least half of it. This created the perfect storm for new investors with more than 10 million new brokerage accounts being opened by people in 2020.

And that’s more than any other year before. The point I’m making is when Elon tweets something silly or Tesla misses earnings targets once or twice, which is very possible, these new investors can very easily begin to panic and start selling, further sinking the stock price.

It’s a massive snowball effect, fueling the fire and driving the price down and down. I don’t like to time the market, but I made a pretty staggering profit from Tesla and I think my next entry point will be when something like this happens and the stock is selling for bargain prices.

In all honesty, I’m all about holding long-term as I typically only throw large amounts of money into stocks I believe in. However, sometimes when you make a level of profit so mind blowing, it might be time to sell.

Having a large percentage of your money in one stock could be extremely risky and that’s why I’ve been diversifying. I see huge potential in electric vehicles and I drive a Tesla myself which I absolutely love.

Despite the lack of noise, the power is instant and it’s quite a thrill to drive. With that said, Tesla has competition rising. I’m not saying the new kids on the block are going to overtake Tesla, but the motor world is evolving and there are so many companies out there with potential as well as Tesla.

So you’re probably interested in where I’ve put all my Tesla profits so let me break it down.

First we have Rivian. They recently went public and let me tell you it’s been great for me so far, despite my son telling me not to buy on IPO day.

Rivian hasn’t sold that many vehicles yet, however, I do really like the company and figured it was worth a shot. I also think it’s really cool that they’re backed by Ford and Amazon, which makes this company all the more interesting and I do think their fleet looks really great.

They have electric pickup trucks, electric SUV’s, and even electric delivery vans, which could be the perfect fit for Amazon Prime. Just imagine if the Hertz order can have such a huge effect on Tesla, what would an order from Amazon do for Rivian stock price?

I’m really excited about this stock and I can’t wait to see how it performs. I’ve also thrown some money into Gores Guggenheim, which is also doing fantastically well for me over this short-term period.

Gorse Guggenheim is basically Polestar. They’ve done a SPAC merger. Polestar is a relatively small company, but I really liked the cars and I think they have a lot of room for growth.

The truth is many of these EVs stocks are overvalued, but Polestar already has strong sales and infrastructure in place, as well as being developed under the major auto automaker Volvo.

It sounds like I’m auditioning for “Top Gear,” but when it comes to renewable energy and going green, it’s not all about electric vehicles. That’s why I’m also loading the boat with Enphase energy, which is performing very well for me.

I’m also buying Enphase, but lately I’ve really been piling in. Enphase are focused on innovation and growth and their revenue is climbing year on year.

They are paving the way throughout this emerging market as more and more customers are turning green, Enphase are just scooping them up. I really feel diversified portfolio are the safest and best ways to go, especially at my age.

No, but seriously. Tesla future most likely is very bright and I’m planning to buy back my stocks when the price dips, I just can’t justify its current value and at the same time ignore other stocks with have such huge potential.

And the moment you’ve all been waiting for. I sold half my stock at $1,100 and the other half, a $1,200. However, I do still believe in Tesla long-term and if you’re huddling, good on ya.

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