Today I purchased 17 more shares of Tesla at a cost of $119.11 per share. In the past few weeks, I have had doubts about my investment in Tesla due to the drop in stock price. However, my cost-basis per share is low since I purchased my shares during the Model 3 ramp in 2018, when Tesla was valued at around $30 billion. As a result, I am still up several hundred percent on my initial investment, but I did lose a significant amount of paper money in the crash. Looking back, if I had sold at the peak, that "paper" money could have been life-changing and it has been weighing on me.
I took some time to reflect on what happened and my own knowledge and realized that despite holding Tesla for 5 years and reading this forum regularly, I have very little understanding of finance, investing and market cycles. To remedy this, I purchased and read a book on investing by Peter Lynch (One Up on Wall Street) over the weekend. Last night, I decided to put some of the principles from the book into practice by printing out the Shareholder Deck from Tesla's website.
I spent several hours reviewing Tesla's financials and created my own spreadsheet with all the basic data (statement of operations, balance sheet, operational summary, Tesla's guidance, etc.) and some graphs, just like all the YouTubers do. It was eye-opening for me to type out the numbers in my own tables and see the company's history. Of course, I was already familiar with some of the information, but going through every row and column in the financial statement and figuring out what the terms mean was a great learning experience for me. It showed me where Tesla came from and gave me some clues about what the future might hold.
I encourage anyone who is stressed out about the share price to do what I did and take a closer look at Tesla's financials to see for themselves how efficient the company is. Tesla has growing revenues, industry-leading margins, very little debt, and a significant amount of cash on hand. It might take some time but eventually the share price will reflect the company's fundamentals again. As a fun exercise, I also compared Tesla's financials to those of Volkswagen and Toyota and was struck by the differences. It helps to put things in perspective!