California based electric vehicles manufacturer, Tesla Motors Inc , now has its share price trading at a 3-month low. Over the past 5 days, the cost of a share has gone from around $220, to nearly $190 – almost a 15% decrease in value. The sharp drop in share price was because of a number of events, most recently, the announcement that the UK decided to leave the EU. This caused the value of the pound (GBP) to depreciate, & also reduced international business & investor confidence.
The CEO of Tesla Motors Inc, Elon Musk, recently announced his plans for the firm to acquire SolarCity Corp , an energy firm which he founded. This unsettled shareholders, & caused the price of Tesla’s stock to tumble by around 10%. Contrastingly, SolarCity Corp’s share price rallied. According to an article published on Wired, the firm wanted to acquire SolarCity to diversify into the energy sector. Elon Musk said “The World does not lack for automotive companies, the world lacks for sustainable energy companies.”
Tesla Motors Inc’s Stock is Good Value for Money
As trading closed on the 24/06/2016, a share in Tesla Motors Inc was trading at $193.15, giving the company a market capitalization of $28.14 billion. Although a price of $193.15 per share is still expensive relative to previous prices (especially from 2010 – 2013), it still represents good value for money.
2016 has been a very important year for the firm, with the launch of their Model 3 EV (on the 31/03/2016.) The Model 3 is different to previous Tesla electric cars, as it is cheap (with prices starting at $35,000) & will be mass produced (nearly 400,000 reservations have been placed.)
Other Reasons to Buy Tesla Motors Inc
There are several benefits of buying Tesla Motors Inc’s stock other than a relatively low current share price. Firstly, the nature of the firm’s business model & products means that they are essentially combating global warming & working towards an eco-friendlier future. Ethical traders will see this a major benefit.
As Tesla Motors Inc is a popular & highly trade stock, it offers high levels of liquidity to traders. This means that there is a constant stream of supply & demand (for their shares), so investors can easily buy or sell. The firm is also becoming more diversified in terms of the products that it sells, producing & selling luxury EVs, as well as cheaper ones (such as the recently launched Model 3.) According to Elon Musk, the launch of the Model 3 was the “biggest product launch ever.” The acquisition of SolarCity would allow Tesla to enter the renewable energy sector, greatly diversifying the business & “hedging risk.”
In other related news, new pictures of the interior of the Model 3 were recently released.