Every stock goes in a cycle and usually that cycle is related to its business cycle. The easiest way to see it is in leisure stocks. For example, when the weather warms up people go to theme parks to go on the roller coaster and enjoy the park. The theme park brings in more revenues during the warm weather, in the cooler months of winter, less people go to theme parks. If you invest in the theme park company, you need to watch the weather and attendance records, if the average spend at the theme park is consistent, then you should expect the stock to move upwards during the warm weather. The point is in many companies, they have natural cycles. The same is true of growth stocks, at some point the straight-line forward growth will level off, is Tesla at that stage?

In an article by David Randall of Reuters, some of the institutional shareholders are convinced although they like Tesla, if the day’s of dizzying growth are over, there are other alternatives to consider.

For many years, Tesla has been valued as a tech company rather than as car company. The people who like Tesla always talked about valuing Tesla similar to Apple or Alphabet, rather than GM. In early June it was trading at 64 times future earnings. For comparison GM trades at 4.7 times, Ford trades at 6.4 forward earnings and Toyota trades at 10.1. If Telsa now resembles more legacy auto company the stock should fall from $176.29. One question is what is fair value?

Ross Gerber, whose LA based firm of Gerber Kawasaki Wealth & Investment Management bought 500,000 shares a decade ago. Mr. Gerber has cut his holdings to 300,000 and believes it should be 40% less than their current value or about $100. His other shares, he has made large capital gains and expects to give some of his stock to a charity to allay the consequences of selling or use them to sell put options, which allows him to raise income without incurring tax penalties.

Tesla stock had 14 times increase in share price in the past 5 years, which encourages people to hang on to some of their shares. Is this time different?

John Belton, a portfolio manager at Gabelli Funds sold its entire position of 65,900 shares, because he believes the fundamentals were becoming detached from reality.

Someone who has been buying is Cathie Wood of ARK Innovation who has increased her shareholding to nearly 12% of the fund’s assets. She bought $100 million worth of shares in April, according to Morningstar data. During April, Ms. Wood said Tesla is worth closer to $2,000 a share by 2027 or worst case scenario $1,400 because of the exciting future it has it front of it.

Graham Tanaka of the Tanaka Growth Fund has owned Tesla since 2011 when its shares were $2, sold its position, because the risk is high in Tesla and you have a great play in Nvidia trading at half the valuation.

Linking to dividend paying stocks, the wonderful thing about the markets is there are many differing opinions who all look at the same data and see something that either reaffirms their idea or tells them to stay away. Only with time do you know who is correct. If you want time to help you, buying a company that pays a dividend while you wait is a good thing to do.

There are more questions than answers, till the next time – to raising questions.