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- A Robinhood trader turned $5,000 into more than $130,000 thanks to Tesla’s wild stock rally.
- Reddit user “Kronos_415” netted the 26-fold return in under a month by trading call options.
- He argued an $800 stock price is fair given Tesla’s innovations and aggressive expansion.
- “Anything beyond $900 for Tesla is purely speculative, as their financials can’t legitimately back a valuation that high yet,” he said.
- Visit Business Insider’s homepage for more stories.
A Robinhood user claims he turned $5,000 into more than $130,000 thanks to Tesla’s remarkable stock rally this year.
The trader, who goes by “Kronos_415” on Reddit, netted the 26-fold return in under a month. He told Business Insider that he’s a 28-year old business analyst who lives in Washington DC and began investing six months ago. He declined to share his name.
The amateur investor and member of the WallStreetBets community first bought Tesla options on Robinhood’s stock-trading app on January 3. He made the decision after reading a slew of good news about the company, including the opening of its new gigafactory in Shanghai and the first deliveries of its Model 3 cars in China.
The electric-car maker’s stock surged more than 50% last month, from about $430 to $650. As a result, Kronos_415 was able to turn his “meager” $5,000 into $51,000, he said.
Next, he spent nearly $27,500 of his earnings on seven Tesla calls on February 3. Each of the options granted him the right to buy the stock at $700 until February 21. After the stock surged, he sold each call — worth $3,925 when he bought them — for $17,025 each, more than quadrupling his money.
Kronos_415 said his Tesla windfall totaled almost $131,000. The screenshot below, which he shared in the WallStreetBets subreddit, backs up his story.
Tesla surged nearly 30% over the course of Monday and Tuesday this week, prompting numerous skeptics to warn its gains weren’t sustainable. Indeed, the stock closed 17% lower at $735 on Wednesday. However, Kronos_415 argued the run up was warranted.
“I feel that the rally this week is well deserved,” he told Business Insider. “The strides Tesla is making in terms of battery technology, combined with their aggressive rollout of vehicles and factories in emerging markets, shows that they are hungry.”
“I think a fair market price is $800,” Kronos_415 continued. “When I saw it reach $900 to $950, I expected the pullback. Anything beyond $900 for Tesla is purely speculative, as their financials can’t legitimately back a valuation that high yet.”
Kronos added that he wouldn’t be surprised if Tesla stock more than doubles to $2,000 in the next few years. In the meantime, he plans to grow his profits in an “aggressively managed” brokerage account, potentially leaving $5,000 to continue trading options on Robinhood.