It has been difficult to invest in 2022, The S&P 500 has fallen into a bear market since the beginning of the year. On top of historically high inflation, ongoing global energy supply chain problems, and back-to-back quarterly retracements in U.S. gross domestic product, these large declines come.
Although periods of heightened volatility in the stock market can be unnerving, investors have been able to navigate to one clear source of inspiration.
The image came from the same source as the one above.
A stock split is a mechanism that allows a publicly traded company to change its share price or outstanding share count. A forward stock split makes it more affordable for everyday investors. The type of split that tends to get investors most excited is enacted by companies that have been out-innovated and out-executing their competitors and have seen their share prices rise substantially over time.
There have been six forward stock splits this year. It's in no particular order.
Aside from splitting their shares to make them more nominally affordable for retail investors who might not otherwise have access to fractional-share purchases through their online broker, these six companies have the same competitive advantages.
The main reason these half-dozen stocks have done well is because they offer sustainable edges over their competitors. Amazon's online marketplace should account for 40% of U.S. online retail sales in the next five years, as well as being the leading electric-vehicle manufacturer in North America.
Palo Alto Networks is playing a key role in the evolution of next- generation cybersecurity software, as evidenced by its sustained e-commerce platform subscription growth.
Most Wall Street analysts have a favorable view of the stock split stocks. The key word here is most.
The Model S, Model 3, Model X, and Model Y are outside. The image is fromtesla
The majority of Wall Street's consensus price targets for the six stock-split stocks are higher than where they closed on September 12.
In mid-July, Gordon Johnson, the CEO and founder of GLJ Research, raised his firm's price target from $68 to $73 after he reiterated a sell rating on EV makerTesla. Both target prices are pre-split figures. Johnson raised his price target on the company to $24.33 per share. With shares of the company climbing to $304 earlier this week, it suggests that GLJ Research expects a decline in the company's share price.
Johnson has many reasons for his pessimism. He doesn't think it's possible for the company to justify its $954 billion valuation without adding 100,000 new EV. It's unclear how the company will sustain EV production growth without regularly opening new gigafactories.
Semiconductor chip shortages and China's zero-COVID strategy have negatively impacted production at the giga factory. With China accounting for a large portion of the company's profits, it leaves the company in a potentially precarious situation.
Gordon Johnson harped on the accounting practices of the company as a reason for its share price to go down. The stock-based compensation underselling, general, and administrative expenses of Musk's company tend to ebb and flow from quarter to quarter. Johnson thinks that the true expenses and operating efficiency of the company aren't being accounted for in its quarterly reports.
Gordon Johnson's pessimism raises the question of whether or not the company could nosedive and lose much of its value.
If it wasn't doing something right, it wouldn't have become the fifth- largest publicly traded company. Without the help of selling renewable energy credits to other automakers, the company has become profitable. Despite the global supply chain issues caused by the COVID-19 Pandemic, it is on track to deliver 1 million electric vehicles by the year 2022.
It's easy to get on Wall Street's good side if you lead with innovation. The Cybertruck and Semi will be brought into production as soon as next year with the help of the four electric vehicles that have been brought into production. The only automaker to have built itself from the ground up to mass production in over half a century isTesla.
Gordon Johnson's analysis is valid for facts as well. Even though it's worth more than every other car company on a combined basis, it's still dealing with the same supply chain issues as other car companies. Trying to justify a multiple of 57 times Wall Street's forecast earnings for the upcoming year in an industry where single-digit price-to- earnings ratios are commonplace when selling a commoditized product simply cannot be done.
I think Johnson is correct in assuming that the market share ofTesla will decline. Although the company has clear competitive advantages at the moment, we are beginning to see new and legacy manufacturers challenge the range of the Model 3.
I have pointed out that Musk has become a liability to the stock of the company.
I believe that lower is the direction that the company will head over the next one to three years, considering its profitability and brand-name recognition.
The CEO of Whole Foods Market is on the board of directors. Suzanne is a member of the board of directors. Sean Williams holds positions in two companies. The Motley Fool has positions in several companies. The following options are recommended by The Motley Fool. There's a disclosure policy at the Motley Fool.
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