Impending Doom ?: Wells Fargo issues warning to Tesla investors: Will Tesla become the new AOL? | message
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Tesla shares could not stop in 2020
Wells Fargo warns: Tesla could face the same fate as AOL
Expert advises investors not to focus solely on growth
Tesla shares clearly had a run in 2020. Despite the Corona slump, which has meanwhile also left its mark on the electric car manufacturer’s share, the paper ended last year with a plus of a whopping 743 percent. Due to the rapid increase, the Musk Group even saw itself compelled to carry out a 1-to-5 share split in order to make the shares appear more affordable again, at least visually. And Tesla’s market capitalization has now swelled to over 660 billion US dollars, putting the stock market valuation of many much larger industry colleagues in the shade.
Of course, such a meteoric rise not only leads to euphoric applause, but also calls out skeptics. At Tesla, this is all the more true, since the fundamental data of the electric vehicle manufacturer do not really justify such a high valuation, but instead investors are primarily betting on the future potential of the Musk Group.
Wells Fargo skeptical of Tesla
The US major bank Wells Fargo recently joined the Tesla critics, who do not foresee a good ending for the new S&P 500 member. Wells Fargo expert Chris Harvey explained this in an interview with CNBC’s Trading Nation. The subject of the interview was the ten forecasts that the bank has made for the year 2021. First and foremost: Tesla is becoming the new AOL. What is meant is the downfall of the US media giant, which was the largest Internet service provider in the world up to the year 2000, but which soon saw itself overtaken by smaller rivals due to a lack of further development and was ultimately taken over by Verizon.
Harvey can imagine a similar fate for Tesla and sees some parallels between the two US corporations: “It reminded us so much of 1998 – the late 90s. AOL, just like Tesla, had a groundbreaking technology, an incredible performance and was late in December in the year [S&P 500-]Index added after a strong run. However, this was the beginning of the end “.
1999 was another very good year for internet and technology companies, but with the bursting of the dotcom bubble in 2000, the same companies lost “50 to 100 percent” of their value.
Doom would happen faster these days
However, in our day and age, things would happen much faster. While in the past it might have taken 12 months to “run its course”, today it would have taken more than six months. So Wells Fargo would now encourage its customers to stop focusing purely on growth and instead start thinking about other elements: “You have to start thinking about cyclicality. You have to start thinking about more high COVID beta companies to include their portfolio “. It is about thinking in the direction of the “old economy” and not the “new economy”.
It would help investors now to focus on the companies that came under great pressure during the crisis: “You should be on the lookout for these really badly battered, less selected companies whose charts look broken”.
Finanzen.net editorial team
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