Profit Pregame

The #1 Piece of Advice I Can Give You When It Comes to Investing in Tesla

It’s Tesla in the news once again…
Tesla’s newest announcement is making waves.

What’s happening?
It seems like every day there’s a brand-new story centering around Tesla. From joining the S&P 500 to the CEO’s outlandish behavior, the company has become an automotive favorite and a reoccurring topic for most major news channels. And it’s latest move has put it back in the spotlight once again.

Earlier this week, the electric vehicle maker unveiled its plan to raise $5 billion by selling additional shares. This isn’t out of the ordinary behavior for any stock, but what’s causing eyebrows to rise is that this is the second time in three months the company has moved like this. On top of this, it also had two other multi-billion-dollar sales of stock earlier this year. In a filing with the Securities and Exchange Commission, the company plans to sell additional shares “from time to time” and “at-the-market” prices.

Where’s the money?

This announcement will mark Tesla’s third stock sale of the year. And there’s no doubt that it’s a smart way for the automaker to take advantage of its meteoric rally through 2020. It also had quite the lineup waiting for when these shares become available. Tesla lines up a deal with ten banks, including Bank of America, Goldman Sachs, and Morgan Stanley, that will serve as sales agents or buy shares themselves when any portion of the $5 billion in stock becomes available.

But this impressive lineup isn’t the only reason Tesla is feeling so confident. The company is also moving forward with its global expansion plan and building factories in Germany and Texas, allowing them to speed up their building process and focus on battery cell manufacturing.

With that said, it’s clear that Tesla’s stock has had a monumental year. From being added to the S&P 500 to its record-breaking 667% rise – it’s no surprise that its been one of the most famous names in the news. But just because a stock is breaking records doesn’t mean it’s an automatic buy – and here’s how I feel about this electric vehicle maker…

How do I get some?

First, let me start with the question we’re all asking: does anything matter when it comes to those companies in the electric vehicle sector? It doesn’t seem like it. Good news? Buyers rush in. Bad news? Buyers rush in.

I’ve been studying the electric vehicle industry for quite some time now, and I’ve realized that regardless of what is happening, investors will always rush to buy EV names on a pullback. And the same is ringing true for Tesla. It just doesn’t seem to matter that the company is looking to raise money. The stock price just continues to climb.

But I’m not buying it literally or figuratively. I wouldn’t even be looking to buy this stock on a massive pullback with the stock’s current valuation. And while that may come as a surprise, if I’ve learned one thing from my 20 years of trading, sometimes the best trade is no trade. And I think that sentiment is ringing true for Tesla right now.

In the Spotlight: A booming company during the pandemic
It’s the same story we’ve been seeing. Companies that don’t require the consumer to leave their house to enjoy their product continue to see their stocks soar. And you can add Stitch Fix Inc. to that list. Stitch fix is an online-based personal styling service that uses recommendation algorithms and data science to personalize clothing items based on size, budget, and style. And the best part is that they send the clothes directly to your door. Simple and easy.

And it seems as if consumers agree, seeing that the company reported fiscal first-quarter results that far exceeded expectations and guided for full-year revenue growth of 20% to 25%. Stitch Fix also reported a surprise profit in its most recent quarter while announcing that Dan Jedda, who happens to be an Amazon.com veteran, would be joining as chief financial officer. Investors liked what they saw, too, because Stitch Fix’s stock skyrocketed 40% following this news. This put them on track for a record one-day gain. And according to the Chief executive, this is just the beginning of the success Stitch Fix sees in the future…

“As we look ahead, we have growing confidence that our track record of strengthening personalization capabilities paired with our nimble supply chain will allow us to deliver better client and business results.”

She also noted that they expect net revenue to grow 12% to 14% year-over-year in Q2. This pared with the full-year revenue growth we talked about earlier is more than enough to catch my eye. I think Stitch Fix is the perfect business model for the current climate, so I’ll be keeping a close eye on this stock, looking to cash in on some fast and easy money. And I’ll be sure to keep you updated.

Describe the Next Three Months in One Word? Volatile.

Every day, the U.S. adds thousands of new COVID-19 cases. Tension between the U.S. and China is mounting. And we just had the most divisive presidential election in our country’s history.

Volatility looks like it’s here to stay… but according to top quant trader Chris Johnson, volatility can be your best friend. And with his new “Strikepoint Formula,” he can turn it into cold, hard cash. Details here.

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