Tesla once again made headlines this week as its remarkable price rise continued to impress investors.
The price of shares rose by 20% on Monday, topping out at $786 before dropping slightly to $780.
Ironically, the Tesla chart now bears an uncanny resemblance to the Bitcoin chart of 2017, leading many observers to ask if it will it suffer a similar dramatic crash.
There are many differences between Bitcoin and Tesla which is why no one can be sure if the same scenario will play out.
Bitcoin suffers to this day from many questions regarding its viability and the future of cryptocurrency.
Lacking a public figurehead, due to the decentralised nature of the network, and the mystery of the anonymous Satoshi Nakamoto, this can often make the communication surrounding the cryptocurrency confusing with so many voices vying for air time. Most famously this led to the separation of the community via the hard-fork that created Bitcoin Cash.
In contrast to this, Tesla has one of the most famous entrepreneurs on the planet at its helm in Elon Musk. Although Musk does have his detractors there is little doubt that much of the current success of Tesla is due to him and the brand awareness he has created.
What has made Tesla rise so sharply in value?
Tesla has no shortage of critics who question both Musk’s tactics and the valuation of its stock, many when the price was $300 lower than it is now.
The electric car company has, in recent years, had to cover losses of more than $1 billion and cut its workforce. There were also the unfortunate outbursts by Musk towards a British diver, as well as a string of autopilot errors. Yet the Tesla stock keeps shifting through the gears.
One key factor was that Musk was able to get ahead of many of the other major car companies throughout the world with the direct focus on creating a fully electric vehicle brand. Tesla has now become synonymous with the electric car at a time when concerns over the impact of global warming are at their height.
It is only now that companies such as Audi and Volkswagen are ramping up production of their own electric range as demand grows. Many other major car companies such as Mercedes – an omnipresent force in Formula 1 – have now entered electric racing series Formula E.
The technological advancement that car companies can learn from pushing boundaries can then be used in their future road cars. There will be pressure on Musk to maintain Tesla’s ‘first move’ advantage.
Where will it stop?
Like all good things, what goes up usually comes crashing back down. The question on many professional investors and amateurs alike is just how high Tesla’s stock can go. Unlike Bitcoin, where the majority of losses were taken by new retail investors, a crash in the value of Tesla could hit many firms worldwide.
For a company and entrepreneur that has faced so many issues already, this recent rise is even more remarkable.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.