The first thing to say is that my original once-in-a-lifetime chance to buy Tesla (NASDAQ: TSLA) shares was five years ago, when I first ran the rule over the US electric car maker. They’re up 887% since then, which would have turned £5k into £49,350. I try not to dwell on it.
Thereafter, I’ve always had the nagging feeling that I’d left it too late. I feared the fanboy hype. I feared Elon Musk’s big mouth. Mostly, I feared the crazy overvaluation, which saw Tesla’s price-to-earnings ratio top 1,000 at one point.
Why take the risk, when I could load up on undervalued FTSE 100 dividend stocks at less than 10 times earnings (and get a decent yield to boot)? I have my answer. Tesla stock may be a roller-coaster ride but most investors wouldn’t have missed it for the world.
Tesla is looking better value
Suddenly, I have another chance. The Tesla share price has crashed 26.57% so far this year. It’s down 5.25% over 12 months to trade at $183 as I write this.
I can’t go back in time and buy Tesla five years ago. But I can but its shares today. They’ve been hugely volatile in the past and recovered, as we saw last year.
Tesla’s January update hastened the sell-off, as auto revenue rose just 1% over the year. Q4 revenues grew just 3% to $25.17bn, trailing estimates, while the company warned vehicle volume growth in 2024 “may be notably lower”.
It’s been a tough year for Tesla, which slashed prices to beat off competition from cheap Chinese imports. This market leader turns out not to have a particularly deep moat. It does have Musk, though, which may be a mixed blessing but his many critics have to answer this question: where would Tesla be without him? We all know the answer.
Time to get behind the wheel
Many fear he has too many distractions, including X (formally Twitter), SpaceX, self-driving tech, and his latest squeeze, humanoid robot Optimus. Markets are wary of his stated desire to ramp up his Tesla ownership share to 25%, to give him the voting control required to turn the company into a “leader in AI and robotics”. They fear a power kick.
Much rests on the next generation of Tesla vehicles, including the long-awaited Cybertruck. That one really could go either way. As could self-driving vehicles, now generating pushback. Tesla faces competition in this space from Alphabet-owned Waymo. On the other hand, Apple has pulled out.
One thing hasn’t changed about Tesla. It’s not like other stocks. Investors either believe, or they don’t. I’ve ever been a true believer of anything, much. I wasn’t brave enough, either. Turns out I was a cautious/medium-risk investor after all. Boo.
With retirement just 10 years away, I’ve just been given one last chance to get in there. I’ll buy Tesla. It’s a bit hit and hope, but there it is. The only question is what do I sell to buy it? I’ve got £5k in a gilts ETF that’s going nowhere (and very, very slowly). Time for a change of pace.
