I’ve never owned Tesla (NASDAQ: TSLA) stock. I’ve also missed several opportunities to buy before its share price surged.
This electric car group’s stock is notoriously volatile, making entry points particularly difficult. Then again, sharp price moves can deliver opportunities to buy after slumps.
For example, this stock slumped to a 52-week low of $138.80 on 22 April 2024. Back then, I urged my wife to buy into Elon Musk’s electric dream, arguing that this latest price collapse was overdone. But my better half strongly dislikes Musk and his antics, so she declined to buy at around $140.
Tesla shares soar
What a missed opportunity. By 18 December 2024, this stock had skyrocketed a 52-week high of $488.54. This was an incredible rise of 249% from my suggested buy price.
Therefore, had we invested, say, £100,000 at $140, we could have sold at the peak for £348,957 — a gain of nearly a quarter of a million pounds. (This calculation assumes a constant pound-dollar conversion rate and no dealing charges.)
Today, I asked my wife to comment on this decision. She replied, “I won’t own anything linked to that [expletive deleted]!“
Losing charge?
Since this pre-Christmas peak, Tesla stock has tumbled. On Friday, 14 February, the shares closed at $355.84, valuing the group at $1.14trn. That’s as much as the combined market valuation of the next 10 biggest carmakers. Wow.
Thus, the share price has dived by 27.2% since 18 December. Hence, £10,000 invested in Tesla stock back then is now worth just £7,284 today, for a loss of £2,716. That’s more than a quarter of the initial investment gone during this latest share-price turbulence.
This stock ain’t cheap
Even after recent slides, Tesla shares have leapt by 88.6% in 12 months, roughly four times the S&P 500‘s comparable gain of 22.3%. What’s more, this stock has trounced the wider market over five years, soaring by 492.4%. No wonder Tesla fans are such vocal supporters of this stock and Elon Musk, their self-proclaimed Technoking.
Would I buy into this business at current price levels? My answer would be a hard no, largely because this stock trades on a stratospheric multiple of 174.7 times trailing earnings. To me, this stock appears priced for perfection, Musk or no Musk.
Nevertheless, it’s clear that — despite his personal and political stunts — Elon has created massive wealth for shareholders. Indeed, I know several Tesla millionaires, including one who has 100% of his personal wealth tied up in this stock. That’s an extremely risky gamble for most, but his past returns have been hugely life-changing.
Summing up
Don’t get me wrong: having enjoyed trips in a number of Tesla models, I think its products are excellent. Also, the business is committed to spending huge sums on artificial intelligence, robotics, and self-driving vehicles. I’m sure more exciting times lie ahead for Tesla and its stockholders.
Alas, almost nothing — other than another spectacular share-price slide — could convince me to board this particular bandwagon. My long-held aversion to buying highly overpriced shares prevents me from joining in the fun. I’d much rather sleep easier at night with a broad, widely diversified portfolio, than bet the farm on any one company or CEO.
In short, given Tesla’s sky-high valuation and erratic leader, I will look elsewhere for my next big winner!
