The Motley Fool

Tesla stock: bull vs bear

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Illustration of bull and bear
Image source: Getty Images.

Bullish: Rupert Hargreaves

I think Tesla (NASDAQ: TSLA) has transformed the global automotive market over the past decade.

As demand for the company’s electric vehicles has rocketed, other vehicle manufacturers have rushed to catch up. While they are making substantial progress, none have the market reach of this market leader.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The company’s brand has almost become synonymous with electric vehicles, in much the same way Alphabet‘s Google has become synonymous with internet searches. 

In the UK, Tesla’s Model 3 is the best-selling plug-in electric vehicle this year. Sales of the car are more than four times higher than its closest competitor. 

Demand for the company’s vehicles is so high it is struggling to produce enough. This is a great problem to have. Management is looking to capitalise on this potential over the next few years by increasing production to 20m vehicles by 2030. 

This is an ambitious target. It would make the group the largest automotive producer globally. Even if Tesla can increase output to 5m vehicles a year (up from around 750k a year presently), I think the stock has tremendous potential. 

As such, I am currently happy to look past the firm’s premium stock market valuation and focus on its growth potential. 

What’s more, as the world transitions away from hydrocarbons towards green energy, the demand for its products could be even higher than initial expectations. These are the reasons why I would buy the stock for my portfolio.

Rupert Hargreaves does not own shares in Tesla.


Bearish: Cliff D’Arcy

In years to come, I will remember 2020-21 as the ‘year(s) of the meme stock’. Beaten-down stocks in various companies soared as millions of retail investors teamed up to push prices ‘to the moon’. But easily the biggest meme stock of recent years has to be Tesla. Buying the stock has produced astonishing returns since 2016 (+2,614% in five years). As I write, Tesla trades at $1,023.50, valuing the electric-car maker at over $1trn. But the shares have been even higher, peaking at $1,243.49 on 4 November.

I honestly think Tesla is a fantastic business selling futuristic products. However, TSLA is a joke stock — on fundamentals, at least. In fact, I’d argue that Tesla is one of the most overvalued stocks I’ve ever seen in 35 years of investing. Currently, it trades on a price-to-earnings ratio of 332.1 and an earnings yield of 0.3%, with no dividend yield. Therefore, for Tesla to ‘earn’ its current market value would take until the year 2353. Quite frankly, that’s insane.

Furthermore, the barely profitable Tesla is the fifth-largest US-listed company by market cap. That’s why I would never buy the stock at current price levels. But I wouldn’t be brave enough to short it, either. In summary, it is a meme stock driven by narrative, euphoria and faith. Hence, its fundamentals hardly matter to the faithful. For me, Tesla is quite simply a cult, with Elon Musk as its charismatic leader making endless promises!

Cliff D’Arcy does not own shares in Tesla.


“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Alphabet (A shares). Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.