Everyone’s talking about Tesla shares. Should I buy?

Jon Smith explains why the price of Tesla shares has been falling fast, but flags up the imminent results release results that may help him decide whether to buy.

| More on:

Image source: Tesla

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As the US stock market has a bit of a jitter, the Tesla (NASDAQ:TSLA) share price is also having a bad run. Tesla shares are down 9% this week alone and are just a couple of bucks away from posting fresh 52-week lows. With a lot of people talking about the stock right now, should I get involved?

Short-term angst

I can put the fall over the past couple of months down to a few reasons. Earlier in the month, the business released a Q1 delivery update. It showed that for the period in question, the firm managed to deliver 386,810 vehicles. This was a large miss — the anticipated figure was 450,000.

Hence, the share price took a nosedive given the implications this has for customer demand. Further, it could be a negative precursor for the financial results, which are due to come out later this month.

Another factor has been general market unease. After starting the year off in hitting all-time highs, the Nasdaq 100 and the S&P 500 have both slumped recently. This has been put down to the fact that investors now expect interest rates to stay higher for longer. This is a negative for stocks in general, as it makes debt more expensive and puts more pressure on consumers. Tesla hasn’t managed to escape this pessimism.

The bigger picture

Despite the bad news, I need to take a step back. Tesla shares are down 15% over the past year, including the fall this week. So we’re not talking about a stock that has halved in value or anything crazy.

Let’s also remember that the shares have always been volatile. One factor that influences this is the number of speculators who actively trade Tesla stock. This means that in the short term, sharp swings can be seen.

Fundamentally, the business is doing well. The miss in deliveries wasn’t great, but it’s not the end of the world. In comparison to the 386k deliveries in Q1 2024, the same figure in 2023 was 422k. In 2022 it was 310k and 2021 it was 185k. So when I take a longer-term view, I can see that Tesla has been ramping up performance over the past few years.

The future is green

Perhaps the biggest reason why I’m thinking about buying Tesla shares at the moment is that electric vehicles (EV) are the future. Given the tightening regulations on emissions and the push by Governments to go green, Tesla has a great runway to grow in the years to come.

I’m seriously considering buying the stock on this current dip. I’m going to wait and see how the quarterly results come out next week and go from there. I think other investors should put the stock on their watchlist to do the same.

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.

More on Investing Articles

Investing Articles

If I’d invested £1,000 in Tesla stock a decade ago, here’s what I’d have now!

While many of us debate whether Tesla stock is worth the price today, it's undeniable that the EV share has…

Read more »

Investing Articles

Here’s what Michael Burry did as the BP share price dipped!

The BP share price has fallen from its peaks once again, and infamous investor Michael Burry may have spotted an…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

What on earth’s going on with the Barclays share price?

The Barclays share price has skyrocketed in recent months, becoming one of the best-performing stocks on the FTSE 100 since…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

Analysts say this amazing FTSE 100 stock is a takeover target!

This FTSE 100 stock's one of the worst-performing companies on the index in 2024. So why might other companies want…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

5.4% yield! 2 UK dividend shares to consider for a £1,080 passive income

I think these UK shares could provide a large and sustainable passive income. And they could be great buys today…

Read more »

Investing Articles

Here’s how investing £250 a month could bag me over £10K in passive income annually

This Fool breaks down how she would go about building a passive income stream worth over £10,000 annually to enjoy…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

I’d snap this FTSE 250 stock up in a heartbeat for juicy returns and growth!

Sumayya Mansoor explains why this FTSE 250 property stock is firmly on her radar as she looks to buy stocks…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

1 dirt-cheap FTSE 100 stock investors should consider buying in June

The FTSE 100 is littered with bargains, according to our writer. She explains why investors should be taking a closer…

Read more »