Learn how to research stocks by understanding a company's story: its industry, market cap, share structure, and dilution history. Using Tesla as an example, the presenters show how macro events and float affect stock price and volatility, then explain why systematic research across multiple sources beats both rushing in and overthinking.
Fundamental analysis and why it matters. Understanding the story and the fundamental aspect of a stock such as share structure, market cap, industry, and much more is essential for making informed decisions. I may use 3 websites in order to know everything I need about the stock. And the reason we want to learn about the stock and be educated about these things is to know better what we can expect from the stock going forward as the truth is not there yet.
So let's take Tesla as an example. The first layer The first layer is to understand what the company does and how they make money. So as we can see here, Tesla is traded on the NASDAQ and is in the automotive space. Knowing the industry in which the company operates helps us better understand the macroeconomic factors that influence the stock price. Different industries have different levels of risk and reaction to market fluctuations. For example, a biocompany running an FDA test can fluctuate 10% solely on rumors and speculations, yet on the macro level, longer timeframe, these tests often take a long time and have several different phases. A recent example as of recording this is Tesla went down 12% in one day because of market sentiment. The market didn't like the financials and the shareholder meeting. Besides that, we also need to take into consideration that some industries are tied together. When Russia and Ukraine started, shipping prices went up, which causes oil prices to go up as well. It's like a big and long domino game, with each domino sector impacting the next. Market Cap: As we previously discussed, market cap is the total value of the company's shares outstanding. That means the total shares that were issued multiplied by the price. Understanding that companies with bigger market cap tend to move slower and ones with smaller market cap tend to move faster is essential in making decisions. That means the amount of money you put in the stock and the risk you're willing to take. As well, they are more volatile. Share structure. Understanding a company's share structure is vital. This involves knowing its authorized share structure, issued shares, outstanding shares, and float. The float represents the amount of shares that are tradable in the public market. Knowing that and the company history with dilution is essential, especially in small caps and OTCs. Oftentimes what happens is a pump occurs in of these stocks, and then afterwards they use the increase in price in order to dilute more shares into the float. This causes an increase in supply of stock out of nowhere, which causes the stock price to go down. By understanding these factors, you can gain insight into a stock behavior, identify the potential risks, and make better decisions overall. The more research and more informed you become with the stock, the better the outcome will be.
By understanding these factors, you can gain more insights stock, its potential risks, and what it's going to do in the near future.
The more research, the more informed you're going to be with a stock, the better the outcome will be.
But do not get paralysis by analysis.
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