7 of Elon Musk’s Favorite Stocks (And Why You Should Care)

Elon Musk stocks to buy - 7 of Elon Musk’s Favorite Stocks (And Why You Should Care)

When Elon Musk speaks, investors pay attention. The CEO and co-founder of Tesla is quite active on Twitter (NYSE:TWTR), discussing his views on asset classes, companies and other topics of interest. Musk currently has over 54 million followers on the platform. Therefore, today I’ll discuss stocks that are possibly among the influential figure’s favorites. These name are some of the best Elon Musk stocks to buy. 

On Twitter, Musk calls himself the “Technoking of Tesla, Imperator of Mars.” As a serial entrepreneur, he is also among the world’s wealthiest people. Plus, when Musk personally attends public gatherings and Tesla events, he quickly becomes the center of attention.

In the past several years, Tesla has become synonymous with electric vehicles (EVs). Additionally, over the past 12 months, TSLA shares have returned about 274%. Today, the market capitalization of the company stands at $585 billion. However, many analysts now debate whether the current price of the stock already reflects its future growth potential. Not to mention, TSLA can be volatile.

But that volatility is not tied to Tesla stock alone. Why? Because much of it has to do with the “technoking” himself. As such, there are other assets and businesses that can likely benefit from Elon Musk’s influential actions and words.

So, against that backdrop, here are seven stocks that are in the limelight thanks to Elon Musk:

  • ARK Space Exploration & Innovation ETF (BATS:ARKX)
  • Bitcoin (CCC:BTC-USD)
  • Dogecoin (CCC:DOGE-USD)
  • Etsy (NASDAQ:ETSY)
  • Kraneshares CSI China Internet ETF (NYSEARCA:KWEB)
  • Paypal (NASDAQ:PYPL)
  • Tesla (NASDAQ:TSLA)

Elon Musk Stocks to Buy: ARK Space Exploration & Innovation ETF (ARKX)

Person looking through space capsule's cabin window into space.
Source: Shutterstock

52-week range: $19.15 – $21.27
Year-to-date (YTD) price change: Down about 2.7% (since inception)
Expense ratio: 0.75%, or $75 on a $10,000 investment annually

First up on this list of Elon Musk stocks to buy is ARKX stock. For this name, it’s first important to know that Elon Musk is also the founder of Spacex, a private entity which manufactures and launches rockets and spacecraft. Spacex achieved its first successful human space launch in 2020. Additionally, in recent months, we have also read about the company’s plans for Starship, “a fully reusable transport system capable of carrying up to 100 people” to Mars. Finally, CNBC also recently reported that more than “500,000 orders for [Spacex’s] Starlink satellite internet service [have been] received to date.”

Therefore, this discussion centers around a newly launched exchange-traded fund (ETF) that also focuses on space. Part of Cathie Wood’s Ark Invest funds family, the ARK Space Exploration & Innovation ETF started trading on Mar. 30. This fund gives access to orbital and suborbital aerospace companies, businesses with enabling technologies and other adjacent companies.

ARKX currently has 39 holdings. In terms of sectoral allocation, industrials have the largest slice (47.1%), followed by information technology (22.2%) and consumer discretionary (13.4%).

The top 10 names in this ETF comprise just under 54% of its $63 million-plus in net assets. Among the leading names in the roster are Trimble (NASDAQ:TRMB), The 3D Printing ETF (BATS:PRNT), JD.com (NASDAQ:JD), Kratos Defense and Security Solutions (NASDAQ:KTOS) and L3harris Technologies (NYSE:LHX). Altogether, although ARKX is a new and small fund, it could appeal to investors who shares Elon Musk’s vision for the future of space exploration.

Bitcoin (BTC-USD)

man in glasses holding a coin that has the Bitcoin (BTC-USD) logo
Source: Shutterstock

52-week range: $8,719.67 – $64,863.10
YTD price change: Up about 90%

Now, though, we move on to cryptocurrencies. It has been a memorable year for Bitcoin bulls. As retail investors put their faith in the most important crypto, institutions also took notice. For instance, JPMorgan Chase (NYSE:JPM) “issued positive guidance” on the crypto while leaders at Blackrock (NYSE:BLK) supposed that Bitcoin could “take the place of gold to a large extent.” 

However, what especially got everyone’s attention was when Tesla bought $1.5 billion worth of Bitcoin back in early February. Now, the company even accepts the cryptocurrency as payment. At the time, BTC-USD started the day at just under $39,000. Today, the crypto is worth around $56,000. Its market cap stands at $1.06 trillion.

However, short-term swings in the price of Bitcoin are wide. Therefore, interested investors need to be able to be patient with this name through such daily moves. They might also want to keep an eye on the institutional interest in this cryptocurrency. In general, a lot of noise and speculation drives the crypto space presently — even with this pick of the Elon Musk stocks to buy.

Elon Musk Stocks to Buy: Dogecoin (DOGE-USD)

A smiling Shiba Inu dog in front of a bright yellow background.
Source: Shutterstock

52-week range: $0.0023 – $0.7376
YTD price change: Up about 8,500%

We often talk about millionaire-maker stocks. But when 2021 came, not many could have foretold that this underdog altcoin would have become a millionaire-making crypto.

Dogecoin began the year at around $0.0047. Today, it is worth about 49 cents, showing a sizeable gain. Put another way, $1,000 invested in DOGE in January would now be worth around $85,000. As of this morning, the crypto has a market cap of over $63 billion.

Software engineers Billy Markus and Jackson Palmer originally set up Dogecoin in 2013 as a payment system based on a meme. However, the coin recently experienced an incredible tailwind to its price via the interest of Reddit traders, followed by a seal of approval from “The Dogefather” himself, Elon Musk. Since the start of the year, Musk has tweeted about the altcoin numerous times.

Dogecoin was initially created as a joke for people to exchange for fun. What a difference a few months have made. That said, it is hard predict whether DOGE-USD will continue to defy gravity for the rest of the year. Meanwhile, followers of Elon Musk are likely to buy more of the “jokecoin” if he continues to tweet favorably. I also believe we may soon see other altcoins become low-cost, high-risk investments with the potential for sizable returns.

Etsy (ETSY)

The Etsy (ETSY) mobile app on a tablet display
Source: Shutterstock

52-week range: $69.35 – $251.86
YTD price change: Down about 4.5%

Our next stock is another favorite of Elon Musk’s. ETSY stock was in the limelight earlier in the year, when Musk tweeted something as simple as “I kinda love Etsy,” citing a hand-knit hat he bought for his dog. Etsy is well-known for its marketplaces, where sellers list crafted goods as well as new or secondhand items. Today, the company serves close to 5 million sellers and over 80 million buyers worldwide.

On May 5, Etsy released first-quarter results. For Q1, consolidated revenue was $550.6 million, up almost 142% year-over-year (YOY). The group also reported a 132% increase in consolidated gross merchandise sales (GMS). Additionally, net income came at $143.8 million, a massive jump of 1048% YOY. Diluted earnings per share (EPS) was $1. Lastly, cash and equivalents at the end of Q1 totaled $1.7 billion. On the results, CFO Rachel Glaser cited the following:

“GMS per active buyer on a trailing twelve month basis was up 20% year-over-year, driven by engagement among our most valuable cohorts, specifically habitual buyers, which represent on average about 40% of Etsy marketplace GMS and our fastest growing buyer segment.”

In the past 12 months, ETSY stock is up nearly 112%. Moreover, the stock’s forward price-earnings (P/E) and price-sales (P/S) ratios of 47.70 and 9.49 point to a frothy valuation level. The shares have, in fact, come under pressure in recent weeks. For this pick of the Elon Musk stocks to buy, potential investors would find better value around $150 or even below.

Elon Musk Stocks to Buy: Kraneshares CSI China Internet ETF (KWEB)

Three wood blocks spelling out "ETF". representing best etfs
Source: Shutterstock

52-week range: $48.69 – $104.94
YTD price change: Down about 9%
Dividend yield: 0.32%
Expense ratio: 0.73%, or $73 on a $10,000 investment annually

In late 2019, Elon Musk got the go-ahead to build cars in Shanghai, China, the most populous nation worldwide. As a result, Tesla now has access to one of the world’s largest car markets. In fact, back in late February, Canalys reported the following:

“[In 2020] a record 1.3 million electric vehicles (EVs) were sold in China […] The Chinese EV market in 2020 was all about two vehicles: the made-in-China Tesla Model 3, the market leader in the first half of 2020, and the Hongguang Mini EV from the SGMW joint venture (SAIC, General Motors and Wuling), the market leader in the second half of 2020, which only launched mid-year.”

Put another way, China is important for Elon Musk. Therefore, for this list of Elon Musk stocks to buy, I’ve added another ETF that invests in internet-related businesses with revenue mostly from China. Moreover, several of these firms have been called the Amazon (NASDAQ:AMZN), Ebay (NASDAQ:EBAY), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), or Twitter of China.

KWEB stock, which has 44 holdings, tracks the returns of the CSI Overseas China Internet Index. The fund began trading in July 2013 and its net assets stand at $4 billion. Among the leading names in the roster are Tencent (OTCMKTS:TCEHY), Alibaba (NYSE:BABA), Pinduoduo (NASDAQ:PDD), Meituan (OTCMKTS:MPNGF) and Baidu (NASDAQ:BIDU).

In the past 52 weeks, this fund is up nearly 40%, having reached an all-time high in mid-February. We’re likely to see these stocks create many quarters of shareholder value in the future. Plus, after experiencing a decline toward $70, the margin of safety has been improved here.

Paypal (PYPL)

PayPal (PYPL) logo overlays daylight photo of corporate building
Source: JHVEPhoto / Shutterstock.com

52-week range: $139.61  – $309.14
YTD price change: Up about 3%

Next up on this list of Elon Musk stocks to buy is Paypal.

Elon Musk helped found X.com back in late 1999. The company later became Paypal, which Musk left in 2000. Now, Paypal is respected as one of the leading financial technology (fintech) firms out there. The group’s payment solutions include its namesake Paypal, the popular Venmo and others.

Moreover, now United States-based users can also buy and sell Bitcoin on the PYPL platform. In March, it launched the “Checkout with Crypto” service that allows U.S. customers to use crypto holdings to pay online merchants.  

On May 5, Paypal also released Q1 metrics, one of the strongest quarters in its history. Revenue was $6.03 billion, up 29% YOY. Non-GAAP operating income totaled $1.67 billion. Non-GAAP EPS was $1.22, also up 84%. On the results, CEO Dan Schulman said the following:

“Our strong first quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy. Our addressable market continues to grow as we launch new products and services for our 392 million active accounts.”

Recent metrics show that “the global Mobile Payment market size was valued at $1.48 trillion in 2019, and is projected to reach $12.06 trillion by 2027, growing at a CAGR of 30.1% from 2020 to 2027.” Therefore, we can expect Paypal to grow its market cap of $285 billion in the years to come. Potential investors in PYPL stock could consider buying this name around $240.

Elon Musk Stocks to Buy: Tesla (TSLA)

Tesla (TSLA) badge on back end of red Tesla car
Source: Hadrian / Shutterstock.com

52-week range: $152.66 – $900.40
YTD price change: Down about 12.5%

Of course, it feels right to conclude this discussion on “Elon Musk stocks to buy” with the EV darling of the man himself: Tesla. This company currently operates two EV factories, one in California and one Shanghai. Additionally, the construction of Berlin and Texas factories is also in progress.

In late April, Tesla announced Q1 metrics. For the quarter, revenue came to $10.4 billion, an increase of 74% YOY. Non-GAAP net income was nearly $1.1 billion, up 363% YOY. Finally, the non-GAAP diluted EPS was 93 cents, up 304% YOY.

All told, Bitcoin and credit sales in Q1 helped the company offset some of its losses. The Street had mixed views on these numbers, which showed more profits from Bitcoin investments than selling cars. As such, since the release of the metrics, TSLA shares have come under pressure. On the earnings call, CEO Elon Musk said the following:

“Tesla achieved record production, deliveries and surpassed $1 billion in non-GAAP net income for the first time […] At this time, we are continuing to ramp production of Model Y in Fremont [California] and Shanghai. In the background, we’re continuing work — development work on the Semi, Cybertruck, the Roadster and other products.”

Today, TSLA stock’s forward P/E and P/S ratios are 139.06 and 12.05, respectively. Despite the recent mixed results, Tesla fans will likely start putting capital back into the shares before long.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

Article printed from InvestorPlace Media, https://investorplace.com/2021/05/7-elon-musk-stocks-to-buy-why-you-should-care/.

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