I think you’d have to be living under a proverbial rock to not have noticed the freakish rise in the share price of one Tesla Inc (NASDAQ: TSLA) over the past few weeks.
Most Aussies will have heard of Tesla by now. Tesla cars are becoming more and more popular on our roads, due in no small part to the local launch of the much more affordable Model 3 last year.
Tesla’s ritzy Model S and Model X cars have been available for a few years, but their six-figure price tags haven’t made them exactly mainstream vehicles on Aussie roads.
Even though Model 3’s are becoming a more common sight around Australia, it’s the company’s stock price that has really been attracting the attention of investors lately.
In moves that are incredibly rare for such a large company, Tesla shares have literally doubled since the start of the year. And this isn’t some small-cap wunderkind, this is a $70 billion company becoming a $140 billion company in the space of six weeks (all figures quoted in this article are in US dollars unless specified).
Not only that, it was only eight months ago that Tesla was a $33 billion company.
That’s right. In June last year, TSLA shares were going for under $180 a share. By New Year’s Day, the Tesla share price was $430. Today, it stands at $774.38. And that’s coming off the all-time high of $969 the company set just last week.
Anyone who bought at the June lows would be sitting on an eye-watering 337% gain today.
What does this mean for ASX investors?
I think the lessons we can glean from this extraordinary swing are two-fold.
Firstly, going against the grain of public opinion and not following the crowd is where the real money is made in the stock market. We all know that companies like Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO) are wonderful companies.
But it was those investors who believed in them back in 2015 when no one else did that are sitting on massive gains today.
If the Altium share price crashed 20% tomorrow, anyone who bought in over the last year would be devastated. But it probably won’t even bat the eyes of anyone who bought in 2015 – what’s a 20% drop worth if you’re still left with an 880% gain?
Secondly, sometimes betting big on a vision can pay off.
I’m not normally a ‘moon-shot’ kind of investor – I prefer to see companies making money for their owners before investing myself. But I bought Tesla shares because I could see where the company’s talented (if eccentric) CEO Elon Musk wanted to take Tesla and I thought he could (and still can).
I didn’t bet the house on Tesla (unfortunately in hindsight), I only invested what I was prepared to lose. But I believed in the vision of the company and it’s paid off very well so far. Finding stocks like that on the ASX is tricky, but it can be done.
Tesla has been a phenomenal growth story and one that many investors have been lucky to share in up to this point. But finding your own moon-shot is never easy until everyone knows about it! And then it’s too late.
So take these lessons from the story of Tesla shares to the ASX and you might find your own future ‘Tesla’!
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Sebastian Bowen owns shares of Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia owns shares of Altium and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.