I have a friend named Joey that shares my enthusiasm for Tesla (NASDAQ:TSLA) stock. Every time I see him, the subject invariably changes to Tesla’s performance that week.
Is it up or down? What’s moving it today? When will it split again? And always, we shake our heads and rue the fact that we didn’t jump into our respective positions a lot earlier in the game.
Because, yeah, I was an early skeptic of Tesla stock. I thought Musk didn’t have his eye on the ball. I thought it was folly to take on the world’s major automakers. I thought the quality suffered. And I thought Tesla stock was more of an effort in vanity than actually wanting to run a great business.
I was wrong. I was wrong about a lot of it.
But what’s important to know about investing is that it’s rarely, if ever, too late to take a position in a company if you’re planning to hold it for a long time.
So, even though I missed the early gains in TSLA stock, I’m still up more than 200% over the last couple of years. And I also know that there’s more where that came from.
Therefore. if you’re in that same boat when it comes to Tesla stock, never fear. There’s plenty of room left you on this bandwagon.
And there’s also plenty of reason to believe that TSLA stock today is still trading at a steep discount.
The Berlin Gigafactory
The biggest tailwind for Tesla right now is in Germany. The Brandenburg state environmental office, after months of delays, finally gave conditional approval this month for Tesla to begin production at its European factory, called the Berlin Gigafactory.
Tesla had first intended to start production there last summer, but the Covid-19 pandemic and regulatory hurdles delayed those plans.
When the Gigafactory is fully operational, Tesla will be able to produce 500,000 vehicles there every year.
Tesla is now in a “public objection period” and must pass other inspection policies, such as air pollution control and water usage checks. But Tesla has said it will only take a couple of weeks to clear those hurdles.
The Gigafactory is big deal because it’s the key to Tesla being able to open its markets to Europe. It’s not sustainable for Tesla to manufacture vehicles in China and ship them to Europe. So having its own European production base will give access to a huge portion of the world that is eager for electric vehicles (EVs).
Wedbush analyst Dan Ives says the Gigafactory is key to pushing TSLA stock from less than $800 (at this writing) to $1,400 per share.
The red tape and headaches seen around the delays/disputes opening up this flagship European factory has been frustrating for investors to watch unfold as many on the Street were doubting if Giga Berlin ever actually would open
Ives also wrote: “We cannot stress the production importance of Giga Berlin to the overall success of Tesla’s footprint in Europe and globally.”
Other Issues
All this isn’t to say that Tesla’s not without some short-term risk right now. EV companies across the board are feeling pain from the semiconductor chip shortage.
Russia’s invasion of Ukraine also endangers lithium reserves there that could be used to make EV batteries. Should Russia take over those reserves, global sanctions will make exporting them to much of the world off-limits.
The Bottom Line on TSLA Stock
One of the biggest obstacles for people to adapt to EVs is the price. But as the price of gasoline tops $4 in the U.S. (thanks again to Russia’s war for that), electric vehicles and Tesla will get a lot more interest. Transportation Secretary Pete Buttigieg even suggested this month that people consider EVs to avoid high gas prices.
Tesla says its already seeing orders increase thanks to gas prices. And that’s a trend that will likely continue.
As my friend Joey and I commonly agree, Tesla is a bargain at $800 for long-time investors. I’m adding to my position pretty much any time I can.
On the date of publication, Patrick Sanders was long TSLA. He did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
