There has been a lot of hype surrounding the stock of Tesla lately. This is not just limited to investors, though! Many have been looking at the stock and saying, “I want in!”
Many are hesitant to buy into such a high-flying company at such a high price. While it is correct that the stock has risen in value recently, this does not mean that it should be purchased at its current price.
Recent news news events may affect the company, generating more attention and speculation. Media attention is always good for companies, as they can make big money off of them.
Plus, with so much public interest in Tesla lately, there has been more demand for shares.
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Tesla is the most expensive stock
This may seem strange at first, but once you look into it, you will see why Tesla is expensive. There are many opportunities to buy and value Tesla stock.
When you look into it, you will find that shares of Tesla are expensive when compared to other stocks. You must do your own research before investing in any stock, and that includes when buying shares of Tesla.
While there are some valid reasons why a company such as Tesla may be expensive, there are also ways to remove the costiness from your portfolio.
Tesla struggles with production
As we noted earlier, production is tight at Tesla. The company has had several production challenges, and it has had to take production cuts as needed.
This has been a continual struggle for the company and caused many early investors to seek other stocks in order to grow their holdings. As a result, many early stockholders have received very high valuations for their shares at current prices.
As we explained earlier, when stocks are near their peak value, people are more willing to pay more for their stock due to increased expectations. This is a type of greed that people experience when they buy shares of companies they don’t fully understand but think they do because of the recent gains they’ve made on them.
This type of greed can cause people to overprice their shares, which results in higher stock prices for everyone. This continues the cycle of growth and expectations being high which drives further sales and growth in share price.[/b]
As we covered earlier in this article, avoid buying Tesla until it reaches its goal of producing 5,000 Model 3s per week.
The market is uncertain about Elon Musk
Many wonder if Tesla will be successful in its business plan of selling luxury cars by online only, limited-production models. If not, then the expensive die-hard fans will have to purchase them at Tesla stores!
If it is successful, then prices for similar models will go up as manufacturers promote themselves by selling luxury cars at high prices. This is a problem for Tesla as more buyers buy a luxury car and less buy an affordable car.
Some people wonder if Elon Musk has too much money and is using his company to make more money. Since he started working with his family before he graduated from University, he must have made some extra money!
Many people worry about how much debt Musk can possibly keep paying off.
Tesla is a luxury car company
There are many reasons why Tesla is considered a luxury car company. For example, the Model 3 is not expensive, but it is a good quality product.
The Model 3 comes in three different packages: base, midgel, and upscale. The upscale package costs $7500 more than the midgel package and includes more features such as automatic headlights and taillights or an LCD display on the front of the car.
These features make the upscale package more special than the others and make it more expensive. Autopilot allows you to drive your Tesla without fully driving your brakes or feet to let it brake while riding in it. With this feature, people buy the upscale package to have this safety feature but do not need to use it often due to its cost.
Investors are concerned about the volatility of the market
Recent events for Tesla have heightened investor concern about the company. In late July, Tesla announced it had reached a deal to take over the massive Model 3 production plant in Shanghai, China.
This news was met with celebration from fans of high-end electric cars. They were excited to see another brand new Tesla model at their local store, and since this is their first one, they wanted to be careful and get a model that was top quality.
Unfortunately, some buyers were disappointed by the low quality of this new plant. It took several months for workers there to complete their training, and even then some of them had difficulty with some of the more complicated tasks.
This raised questions about whether or not customers would be able to trust these employees with their own lives, as they struggled against high production volume and automation. Luckily for them, it seems they do good work.
Tesla does not make profits
While most electric car manufacturers make a profit by selling their cars, Tesla does not. They take a percentage of every sale, but it is very small percentage at that.
The cost of manufacturing and selling an electric car is extremely high. The process of making and selling a single car requires expensive materials, production costs, and even profits.
Since the majority of electric cars are sold on warranty coverage and brand recognition, only the wealthy and well-prepared individuals will be able to afford an electric car. This can be costly for companies as they need to market their product before they can sell it.
Many times companies use promotion codes when purchasing products to keep consumers happy and prepared for the product. Without these codes being used, it can end up being expensive for people who just want to own an efficient vehicle.
Competition in the industry
Despite being one of the rare and pricey mainstream electric cars, Tesla is very competitively priced. While not everyone has a need for the more expensive Model S, everyone else with an electric car should look into how much they cost to run and maintain.
The low price of the Model S makes it an attractive vehicle to new users. They can get a solid introduction to driving while still being able to afford more expensive models down the road.
On the other hand, more expensive models may require more maintenance and professional services. Whereas the $30,000+ Model X may only require yearly inspections and minor maintenance, $60,000+ models may require full–fledged service contracts performed by professionals.
This cost difference can be huge for someone without professional services. For example, if someone was unaware of needing new tires or repairs, they could go out of their budget.
Lack of manufacturing experience hurts Telsa
Having no manufacturing experience means that Tesla cannot effectively market and sell their products. This is very important! Without a well-developed marketing and sales strategy, Tesla cannot succeed.
Being new to manufacturing makes it hard for companies to know what products look good and are functional. People can easily look past a product that looks fancy but does not work well.
That is why it is important for a company like Samsung to have a high-quality phone every year. People buy them because they look good and are functional.
Having a poorly designed product can hurt a company’s stock price. If the stock price drops, it will be hard for people to invest in that company again. This can also happen when a company creates a better product than before, as Samsung does.