Last year the stock split somewhere around mid $1300.
We have seen the stock price get that close just recently, and with these new factories
and Q4 profits, it is a certain possibility that the stock price would probably exceed
the price it was when it split last time.
Which means that it's possible Tesla's stock price could go absolutely crazy.
Last time the split announcement increased the stock price 30%.
Is that so hard to believe?
Now the market will be expecting it again.
So much so that perhaps it will jump even higher this time, before likely a fast re-adjust
when many people take profits.
Alright, so there is even a possibility that Tesla could shortly open their factories and
hit perhaps as a high as a $3 EPS for Q4.
All of this will obviously create a huge boost in the stock price.
Which would make it exceed the previous stock price when the last split was announced.
I mean to be honest, I think it's possible the stock could shoot past $1500.
That is a huge jump.
And as I think there is a reasonable chance of so many stock boosting events coming up,
I have backed this up with some options too.
An opportunity like this does not come up often.
In fact I have bet quite a bit on this, and could stand to lose it all possibly.
But the potential pay off is worth it in my opinion.
So once these events occur, then it sends the stock price so high, that Tesla will inevitably
have to announce another split.
If we are at $1500 stock price, and this announcement boosts the stock a further 30%, that that
takes us to $2000 stock price.
I mean as a HODLing shareholder this is also exciting, and you get to see your stock and
net worth rise significantly, but the stock will re-adjust eventually.
But the price could still remain strong, north of $1500.
One of the reasons Tesla have to split is becomes too hard for the Employee Stock Purchase
Plan, Tesla want to make it easy for their employees to own stock.
I don't believe they can buy fractions of the stock, like some trading platforms allow.
Let's be realistic here, Tesla don't want their stock price trading too high, likely
for several reasons.
It is going to split.
Alright there could be some major macro or black swan event, where Tesla and the market
crash so much, that perhaps Tesla doesn't need to split for a bit more time.
On the other hand, it could approach it's last pre-split price this month.
Tesla will have unbelievable Q4 profits, we are talking over 10 times what they were the
last Q4.
Over 10x in EPS within just one year.
In January 2021 Tesla traded as high as $940.
At the time I am recording this, the stock price is less than 10% higher, yet we have
over 10x EPS.
We also have 2 new factories where everything pretty much went to plan, except for regulatory
issues with Berlin, and the Cyber Truck was delayed about a year.
Oh and China has will be about 3 or 4 times bigger than initially assumed too.
Anyway, you were there, I was there, we witnessed all that became of Tesla over the last year.
This is meant to be about how low Tesla's stock price appears to be, relative to everything
that has happened.
This is more about what is ahead of us, such as Q4 earnings, accompanied with the earnings
call, which we know is going to be a big deal because Elon is on it.
It may be streamed with live video in Austin perhaps, and then Elon might officially announce
the opening of Giga Austin.
There is obviously going to be something, or somethings mentioned that are a big deal
on this call.
With out standing earnings, and at least one factory opened in the next couple of months,
it has a strong possibility of pushing the stock price into split potential prices.
The market may even preemptively feel it coming, and push the price up before even any mention
of a split, just the mere inkling, that it is on the way.
This could end up raising the chances of the split further, thus resulting in more people
preemptively purchasing.
Possibly resulting in a self fulfilling prophecy.
There are a lot of potential catalysts coming up right now, that could create some momentum
in the stock price again.
Just to remind you the last quarterly results that were announced took the stock price above
$1200.
This result is going to be at least 50% higher than the last, just quarter over quarter,
I think probably even over 60% higher.
This is a gigantic leap in profits just over a quarter.
If this is also pushed with the Austin opening then, that is some serious momentum for the
stock.
The price could leap.
Austin opening is a really big deal, because we get 4680 specifications from the vehicles.
All the speculation on what difference these batteries will make to the vehicles will be
put to rest.
They will likely have faster charging capabilities and longer range, with higher performance
and a lighter weight.
We are continually hearing about the latest and greatest technology from each of the legacy
autos, or Chinese autos.
Well this is the latest and greatest from Tesla, for their mainstream model, since the
2170 battery was introduced.
It will be an even greater leap in technology than the 2170 was from the 18650.
And it's all Tesla.
This is why it's one other reason the Austin opening is such a massive deal.
All of these events and others could push the stock price up, and maintain it there,
resulting in Tesla announcing a split.
Tesla will likely do $2.5 billion in net profit Q4.
Annualized that comes to $10 billion.
If you think Tesla should have a quarterly p/e ratio of 150, that puts the stock price
at around $1500.
Even if the p/e ratio is lower from that event, then there are the other events to improve
it's chances of reach split level.
To be honest if you are just HODLing Tesla, for years and years, the split is of little
consequence to you.
Although, it may allow you to accumulate shares a bit easier, if you can't buy at fractions.
In the long run it makes very little difference.
But for me, if there is a chance of a split around the corner, I feel it prudent to always
have some options on the go, just in case it's announced.
And that is one thing that the split will do, it will make options trading a lot easier,
and less risky, the options will only be about 1/5 the price they are today.
This may not even be Tesla's last split any time soon either, there are plenty of projections
I have done that see Tesla at a $5,000 stock price before 2025.
It may depend on a lot of things.
Right now everyone is talking about the macro issues though.
Which may inevitable affect p/e ratios.
But in reality, usually the only macro event that affects the stock price is the crash.
Until then it will pretty much keep going up, well up and down, in an upward trend,
until it drops.
The fact that everyone is talking macro, macro right now, probably means it's not going to
crash, it usually catches people off guard.
Also the insanity is usually at the peak before the crash.
In the last 6 months building up to a crash, you usually see the highest increases.
But there are some dangerous events circulating around the economy, so you never can tell,
and you never can predict them.
Look how many people have been talking about crash coming, just about every month last
year.
As John Maynard Keynes said - "the markets can remain irrational longer than you can
remain solvent".
Markets are not something you can predict.
I don't try to, and I am clear that I don't try to.
I do however, plan on putting together some crash insurance, as I am flying a little close
to the sun.
Rather than attempt to predict the markets, I do the best I can to predict the future
of Tesla.
And as we are just starting to see, now that Tesla is done covering it's OPEX, it will
start making some serious money, as we are about to witness for the first time in Q4.
Sadly, this may be the only time for a little while, as these new factories will take some
time to ramp up efficiently enough to make profits.
Towards the end of the year, when the new factories are seeing some decent volume, then
Tesla will be one serious money maker.
Double deliveries, means a lot more than double profits.
Either way, I see all of these events, as enough to take the Tesla stock price to the
next level, perhaps trading between $1300 and 1500, which is Tesla stock split price
territory.
Let me know your thoughts in the comments, what price do you think the stock will need
to reach before a split is announced, and when do you see that happening.