Key Points
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Tesla shares got a boost in October as vehicle deliveries beat Wall Street expectations.
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I sold Meta Platforms when the shares surged amid the COVID-19 pandemic.
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Holding your winners is key, since successful stocks tend to keep winning over time.
- Motley Fool Issues Rare “Total Conviction” Buy Alert ›
Shares of electric vehicle (EV) titan Tesla (NASDAQ: TSLA) are enjoying a surge in October. The company reported third-quarter vehicle delivery numbers ahead of Wall Street’s estimates on Oct. 2, creating anticipation for promising earnings when the company announces Q3 results on Oct. 21. The stock closed at $382.70 on Oct. 9, up nearly 8% from the end of September.
However, shares are still down about 13% during the past 12 months. Given the October bump, is now the time to sell Tesla stock?
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
I advise against it. I sold shares in another company after they experienced a spike back in 2021, and I regret it. That stock was Meta Platforms (NASDAQ: META), and it’s a cautionary tale about the importance of adhering to a key Motley Fool investing philosophy: Let your winners keep winning.
Image source: Tesla.
My Meta mistake
In 2021, the world was suffering through the COVID-19 pandemic. People were staying home and spending large amounts of time online. This increased consumer traffic to Meta’s web properties, causing shares of the social media giant to skyrocket to $382.18 on Sept. 7 of that year, a record closing price at the time.
That was quite the rise from its initial public offering price of $38 in 2012, the year I bought shares. The stock was a clear winner. However, I thought the pandemic-induced share price increase wouldn’t last after society returned to normal. I was also dubious of Chief Executive Officer Mark Zuckerberg’s plans for the metaverse, which he introduced in 2021. These factors drove me to sell.
In the short term, I was right. Meta’s foray into the metaverse floundered, as its Reality Labs division lost $13.7 billion in 2022. The company’s forecasts for user and revenue growth that year failed to materialize, and the stock fell.
Winners keep winning
Then, artificial intelligence (AI) arrived. Zuckerberg quickly pivoted Meta toward heavy investments in AI. The recent release of its Muse AI app was a hit, garnering 2 million daily users. Meta stock closed at $718.67 on Oct. 9, about double where I sold.
As Motley Fool co-founder David Gardner has stated, “Past performance may well be the single best indicator you and I have of future results. What do winners do? Winners win.”
I forgot that valuable piece of advice. I may have gotten around a 10-fold return on Meta, which is awesome, but I missed out on shares that soared 88% from there, not to mention the passive income after Meta began paying a dividend in 2024.
All of that taught me you don’t want to get rid of your winners. Tesla is one of those. It’s quickly evolving beyond its electric-vehicle roots and leveraging AI as a key element in that evolution. In fact, famed Wall Street analyst Dan Ives believes it should not be evaluated as a car company, stating, “We view Tesla as one of the clearest ways to own physical AI in the public markets.”
Why Tesla stock is worth holding
Tesla has been working on AI for more than a decade. This culminated in the launch of its autonomous ride-hailing business using the new Cybercab on Sept. 3, creating a new revenue stream. A month later, the company announced that more than 300 of these self-driving vehicles now serve Austin, Texas, an eightfold increase. The fast ramp-up indicates the Cybercab is gaining customer traction.
Capitalizing on AI is just the start. Tesla’s vision for the future is a world of “sustainable abundance.” This concept entails using technology sustainably to create boundless prosperity for all. This ambitious target highlights the company’s commitment to tackling challenges once considered impossible, much like its early efforts to build a viable electric vehicle.
Today, it has succeeded in EVs. While its electric auto sales in the second quarter rose 23% year over year to $20.5 billion, rival Ford Motor Company experienced a huge 56% drop in Q2 EV revenue to $1 billion. Tesla’s Q3 delivery numbers suggest more growth ahead.
The company’s strong sales despite last year’s expiration of federal EV tax credits, the Cybercab showing early success, and a far-flung vision for the future are some of the reasons I’m holding my Tesla shares. It could end up being the winning stock you were glad you didn’t sell too early.
Missed AI’s “Act 1”? Act 2 Could Be 14x Bigger
Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005.
But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout, a massive technology build-out that Google’s CEO says could be more profound than fire or electricity.
While everyone watches the chip designers, one “backbone” company provides the critical technology that Nvidia and AMD literally cannot function without. We’ve detailed this under-the-radar player in our new AI Playbook.
Robert Izquierdo has positions in Ford Motor Company, Meta Platforms, and Tesla. The Motley Fool has positions in and recommends Meta Platforms and Tesla. The Motley Fool has a disclosure policy.
