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Should you invest in Tesla stock?

Updated: Jan 26, 2023

The EV industry is one of the fastest-growing, and Tesla is the poster child. Led by an outspoken CEO, the company has smashed one record after another. However, should you be investing your money in Tesla? Keep reading to see what analysts recommend.

With this article, I mark the opening of a new section on my blog, dedicated to investing in Electric Vehicles.

About Tesla

Tesla is undoubtedly the company that made electric vehicles mainstream, supporting its cars with a global network of fast DC public chargers known as Superchargers. It had a massive financial year in 2021, shipping more than 900,000 battery-electric vehicles (BEVs), by far more than its competitors.

Revenue for the last quarter was $17.7 billion, beating expectations by more than half a billion dollars. It represented a 6 percent jump. Adjusted earnings came in at $2.54 per share, a massive increase of 218 percent over the same quarter in the previous year. It was the fourth straight quarter of gain for Tesla.

Tesla earnings per share

Tesla, however, is not immune to the uncertainties of doing business. Thanks to increasing raw materials and logistics costs, the automaker has had to raise prices on its cars, and its cheapest electric vehicle now starts at $47,000, a jump of $2,000.

Increased price notwithstanding, Tesla struggles to meet the demand for its cars, some of whom have months of waiting times. Next year, the company is expected to release the much-awaiting Cybertruck pickup truck and its Class 8 electric truck, the Tesla Semi, before that.

Tesla also makes solar panels and battery energy storage systems like Powerwall and Megapack. It is in the process of commissioning two new EV and battery production facilities in Texas and Berlin.

What are experts saying about Tesla stock?

While bulls will tout the solid performance of Tesla in recent quarters, there are reasons to listen to the bears before investing your money in Tesla stock.

For example, the automobile industry is a tough one to operate in. Competitors are coming strong, too, as they vie to unseat Tesla as the market leader in EVs. BYD moved 93,000 electric vehicles in the last month of 2021, which is too close to Tesla’s monthly average of 102,000 in the quarter. Stateside, competitors like GM and Ford are ramping up electric vehicle production and investments.

Apart from that, many experts point out that Tesla’s stock trades at a significant premium, which the bulls claim is well deserved. However, Tesla stock could contract because even the bulls may change their mind as many of Tesla’s promises are still a work in progress.

Moreover, Tesla may become a victim of its own stellar performance as it is expected to maintain that level of growth. Any stall or misstep could send the stock crashing.

Is investing in Tesla stock a smart move?

Unless you are a die-hard Tesla fan or have a huge appetite for risks, investing in Tesla stock is not the most prudent financial decision, especially at its current valuation. The P/E ratio is currently sitting at 184, which is very high.

On the other hand, the current dip might represent a perfect entry opportunity:


Hope this was useful for you! Please note that the above content is not an investment advise and shall be considered only for informative purpose.

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Mar 23, 2022

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