2020 Could Be Tesla Stock’s Best Year Yet
One of the real surprises of this year is the success of Tesla Inc (NASDAQ:TSLA). Tesla stock has gained about 50% year-to-date and has made a lot of haters eat their words.
While so many people have called TSLA stock overvalued for so long, it has recently exploded in value and caused many to take a second look at the renewable energy stock. And while they’re looking, they might want to consider that Tesla may end up being among the biggest winners in 2020.
In order to understand why I’m so bullish on Tesla stock, you have to understand the state of the stock market right now.
Chart courtesy of StockCharts.com
Share prices across the board are in varying degrees of risk due to the coronavirus (COVID-19). The disease has thrown a wrench into what was otherwise a pretty strong market.
Now with the coronavirus spreading (both in the sense of its literal infection rate and the mass hysteria that has followed), we have a market that is seeing a huge amount of volatility.
And, to be fair, people have a genuine right to be concerned, whether COVID-19 turns out to be just a bad flu or something far worse.
While I tend to believe that the coronavirus will likely end up having a worse bark than its bite, at the end of the day, there are legitimate fears of a pandemic, so countries have been taking serious steps to combat the virus.
We’re seeing quarantines, travel bans, and all manner of other problems arising due to the spread of COVID-19, leading many stocks to be pounded.
TSLA stock, meanwhile, was on the rise pre-coronavirus, but now with so many investors in varying states of panic, there is less enthusiasm building behind the renewable energy stock.
And that could be a big mistake.
You see, like I said above, there’s a fairly good chance that the coronavirus will end up much like the swine flu and SARS, which is to say that it will not be the world-ending virus it’s being billed as in the media.
And if that’s the case, we could anticipate a huge market rally, with companies like Tesla Inc likely being at the fore of that charge. That’s because of all the momentum the company had pre-coronavirus.
Sure, COVID-19 has become the story of the year as far as the stock market is concerned, but before that, there was a legitimate argument to be made that Tesla stock was the biggest surprise of 2020.
If things return to normal, I expect that TSLA stock will regain its position in short order.
And then, of course, there’s the political shifts taking place in the United States. The presidential election is on the horizon, so we could see a whole new administration take over from Donald Trump in early 2021.
That could have a wide array of effects on the market. Although studies have shown that people tend to overestimate the impact that a sitting president has on the economy, one of the most important things that a president can do is set the agenda when it comes to climate change.
Trump, for his part, has been reluctant to make any significant changes pertaining to climate change. Joe Biden and Bernie Sanders (the two people most likely to be the Democratic Party presidential nominee) are both much more gung ho on pushing game-changing climate change agendas.
Sanders has endorsed the “Green New Deal,” which would radically redefine industry in the United States. Biden similarly supports making big changes in relation to the climate, if to a lesser degree than his competitor.
Still, in both cases, we could expect to see a return to Barack Obama-era subsidies and tax incentives for green energy. That could include policies that greatly benefit the electric vehicle industry.
Seeing as how Tesla Inc is the biggest electric vehicle maker in the market, that would likely translate to higher sales numbers and revenue, giving a boost to Tesla stock.
Furthermore, it’s worth remembering that Tesla is more than just a car company: it’s also a renewable energy company.
While cars make up the largest share of its business at the moment, the company has aspirations to dabble in everything from clean home energy, to solar panel roof tiles, to all manner of interesting green technologies. If a new president ends up in the White House in 2021, we could see a restoration of green energy policies.
In other words, a new president could radically boost the revenue growth for Tesla Inc when it comes to auto sales. Furthermore, there may be other opportunities in expanding Tesla’s renewable energy segment, meaning the company could balloon in value in the coming years.
If all that goes according to plan, TSLA stock would likely see a massive uptick.
Between the presidential election in November and the massive market rally that could be brewing right now as a result of the coronavirus panic, we may witness one of the fastest growth spurts we’ve seen yet with Tesla stock.
And there’s one final way that Tesla Inc stands to profit big from the current market trends: its production facilities.
While many companies take advantage of cheap labor in China, Tesla has one of its renowned “Gigafactories” in the U.S., with a few more set to open globally.
That means the company could reduce the impact of the coronavirus on its operations if the virus remains mostly contained in China.
Now, I won’t lie to you and say there are no concerns about TSLA stock; there are. Plenty.
From the company’s valuation relative to how many cars it has sold, to whether it can hit the lofty numbers it has set for itself, there are legitimate concerns about Tesla. But those issues have been around for years, and Tesla stock still finds a way to make gains.
What we’ve seen in recent times is that the market is behind CEO Elon Musk and his renewable energy stock. Despite all the skepticism and opposition, Tesla Inc has proven time and time again to be a resilient company capable of making investors lots of money.
With the stock market situated as it is right now, I could see TSLA stock doubling in the coming months or year.
The stock market is volatile; you don’t need to be an expert to see that. There are a lot of uncertainties going into the remainder of 2020, and uncertainty is not a friend of investors.
That being said, tumultuous times can result in big swings—both up and down—for stocks.
In this situation, it’s my belief that everything is going in the right direction for Tesla. And that means we could see big gains from Tesla stock.
In fact, I’d go as far to say that few companies are as well positioned as Tesla Inc is to see fast profits in 2020.