Today an order to sell two shares of Tesla (TSLA) at $1750.00 each was executed. I sent the order about two weeks ago due to the following issues with Tesla’s stock:
Elon Musk is an eccentric leader who has been in trouble with the SEC for improper disclosures.
Tesla’s accounting practices have been questioned as overly aggressive or even downright fraudulent and there has been turnover in the executive suite on – either CFO or controller or Chief Accounting Officer.
Musk’s employment contract rewards performance of the common shares – I don’t remember the particulars of the rewards – and a manager with a track record of improper share price manipulation being compensated for share price appreciation are not a shareholder-friendly setting.
Tesla is the most highly valued auto manufacturer in the world with a history replete of consistent profits.
Now, I still want exposure to TSLA in our portfolio:
Musk is a visionary leader operating a company that is revolutionizing auto manufacturing, solar-powered electricity, and electrical storage.
As the world becomes more concerned about carbon emissions TSLA is well positioned to become a leader in solar electricity and electric vehicles and I like their ability seize opportunities not yet commercialized.
TSLA has taken steps to manage its stock’s suitability for inclusion in widely tracked indices (bolstering the profit of the company’s most recent reporting period by pulling forward revenue from selling carbon credits corresponding to future periods and announcing a stock split). Inclusion in such indices would likely require purchases by funds designed to earn the return of said indices. Index funds are very popular with both investors and academics and now control a significant share of all invested capital. TSLA’s addition to the S&P 500 (and potentially the Dow Jones Industrial Average) would likely propel shares of the company even higher.
TSLA has been a portfolio constituent since 2016 when I bought shares for roughly $200 each. After opening Monday’s trading as 2.1% of our portfolio, the execution of today’s limit order reduced our position to 1.7% of the portfolio as of the market’s close. The $3,500 liquidated is more than double our original cost basis (roughly $1650). Though I like the company’s prospect for the future, I plan to write another limit order that would sell another two shares at $2000-2500. Exposure to this company is important, but shares are so richly valued It’d be unfortunate to not take profits.