One of the hottest stocks in U.S. stock markets, Tesla Inc. (NASDAQ:TSLA) has seen its share price skyrocket higher ins recent months.
Investors hungry for growth have piled in innovative companies like Tesla that aim to transform their respective industries. Growth investors now have to consider how long the runway could be for this stock long term.
As far growth goes, the runway certainly appears to be sufficiently long in the electric vehicle and autonomous driving space. That said, Tesla’s current stock price does factor in a significant among of long-term growth at these levels. This means that investors bullish on Tesla have to believe in a higher long-term growth rate than the one that is being priced in by the market, as long-term margins remain uncertain. Investors concerned about fundamentals ought to consider focusing on companies with established earnings and high quality balance sheets in other high-growth sectors first.
I still have some concern over the sustainability of Tesla’s stock price, particularly in the contest of institutional money that is flowing in this stock. With most institutional money mangers forced to trim positions to maintain portfolio holdings in the 5-10% range, I expect additional selling to materialize should Tesla’s stock price continue to climb much more above current levels.
Invest wisely, my friends.
