08 september 2020
16:59
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The Tesla share is again severely punished. According to analysts, the significant price rises of the share have now been over.
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They may be small investors, but there are many.
Nico Inberg
Analyst IEX.nl
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“I think the sharp price rises of Tesla have now been over for a while,” says analyst Nico Inberg of the investor website IEX. Tesla is doing well, but a lot of air was blown into the price valuation. Trading data from the popular American investment app Robinhood shows that a large group of small investors jumped on a few stocks, including Tesla. That drives prices up enormously. ‘
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Chain reaction
According to Inberg, small investors are creating a chain reaction. ‘They are small investors, but there are many. A stock like Tesla will be in the news. Larger parties will then also look at the share, which means that a group such as the Japanese Softbank takes enormous positions in those types of tech stocks. This creates significant speculative moments in a short time, causing stocks to go up very fast. Traders now know that Softbank has big stakes and may fear it will want to wind down its position. As a result, everyone walks to the exit. ‘
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Supply and demand
Stock prices are driven by supply and demand. With high demand, the price of a share rises and investors may confuse the price with the value of the share. The value is determined by the turnover and the profit. “Analysts have a tendency to quickly increase their price targets and advice when the price of a stock rises sharply,” says Inberg. ‘Certainly with stocks like Tesla, because the valuation is very difficult and is accompanied by a lot of assumptions about the development of turnover and profit.’
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