If I’d invested in Tesla shares at its IPO, here’s what I’d have now

Jon Smith has been considering the performance of Tesla shares since 2010. But after their remarkable move higher, do they still have growth potential?

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Back in 2021, Tesla (NASDAQ:TSLA) shares rallied to push the market-cap above $1trn. In doing so, it joined an exclusive club that only a handful of companies have ever been in.

For the investors who bought back at the IPO in 2010, it has been an incredible rollercoaster ride. I can’t claim to have pocketed the stock after it launched, but if I had then let’s see how rich I’d be!

It’s a big number

Back in 2010, Tesla went public with a share price of $17. In the process, it raised $226m to help further grow the company.

Even though the stock jumped in the initial few weeks, it traded without too much fanfare for the first few years. It was only in late 2019 did it start to really move higher. Over the course of the pandemic, the growth was parabolic.

The company has undertaken stock splits since the IPO, so it’s not a true return to compare the $17 IPO price to the current price of $255. When I use more accurate calculations, the return since the IPO is 15,994%.

This is quite a staggering figure. To put this in perspective, if I’d invested £1k at the IPO, I’d be sitting on a profit of just under £160k. If anyone had a high conviction and had invested £10k, it would be worth well over a million.

Let’s take a step back

It’s easy to sit here and complain that Tesla isn’t a good example to look back on because it’s such a unique stock. I disagree. Sure, these kind of returns don’t happen everyday, but it’s not so obscure that investors can’t try to pick the next big thing.

For example, there are some large UK stocks that would have generated substantial returns over the same period since the Tesla IPO. Ashtead Group has gained 5,301% since then. JD Sports Fashion is up 1,798% over the same period.

Even when I look at the picture right now, I feel there are stocks that could offer strong returns like Tesla over the next decade. The recent IPO of Arm Holdings is a case in point. The links that the company has to artificial intelligence (AI) and computing chips could make it a key component for many firms worldwide in the future.

Future potential

In coming full circle, it’s worth thinking about how Tesla could perform over the next decade. I don’t see the returns being anywhere as near as strong. This is simply because it’s valued too highly to be able to deliver the same percentage gains.

However, this doesn’t mean it can’t offer smaller profits for investors who are happy to be patient. And if I was still holding IPO stock as a long-term investor, I’d really try to resist the urge to sell!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. 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.

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