The past half-year has been a wild roller-coaster ride for the Tesla (NASDAQ: TSLA) share price. For three months, Tesla stock was a big winner, soaring to new heights before end-2024. However, the shares have since collapsed, leaving investors on a round trip and back to the start.
Tesla stock skyrockets
On 23 September 2024, Tesla stock closed at $250, 80% above the low of $138.80 on 22 April. It then drifted sideways, but took off after closing at $242.84 on 4 November.
When Donald Trump was re-elected as US president, this triggered a so-called ‘Trump bump’. Shares in companies with links to the president and his policies exploded in value.
For Tesla, Elon Musk’s closeness to Trump paid off handsomely. The stock soared like a SpaceX rocket, peaking at a record of $488.54 on 18 December 2024.
On a road to nowhere
However, like the failed SpaceX Starship launch on 7 March, the Tesla share price came crashing back to Earth. As it plunged, I gave this ultimate meme stock a firm thumbs-down on 18 February.
My hunch was right, as Tesla’s share slide continued. On 7 March, the stock closed at $222.15, down more than half (-54.5%) from a pre-Christmas high. On Friday, 21 March, it closed at $248.71, down 0.5% from its 23 September 2024 close.
In summary, Tesla’s Trump bump was followed by an equal and opposite Trump slump, leaving its share price unchanged over six months. Whoa.
What next for this stock?
Lacking a crystal ball, I cannot forecast the future fluctuations of Tesla shares. However, I see two powerful opposing trends at work here.
First, Tesla is far and away the most popular S&P 500 stock among day traders and short-term speculators. Thus, when its price falls, fanboys often rush in, buying the dip en masse. This has contributed to a 12% rise in the share price since its 7 March close.
Second, sellers and doubters (including me) feel that Elon Musk’s political and personal antics may permanently tarnish his brand. Here in the UK, this is known as ‘doing a Ratner’, after ill-advised remarks by Gerald Ratner in 1991 almost brought down jeweller Ratners Group.
Right now, Tesla’s market cap of $779.3bn puts its on a rating of 122 times earnings and a 0% dividend yield. As a fundamental/value investor, this stock looks far too richly valued for my blood. Of course, I could be wrong and Tesla bulls could send this stock soaring again.
Then again, I could never buy any products linked to Musk, as it would be incompatible with my personal beliefs. Also, Musk is a serial over-promiser, with countless failed launches and soon-to-come upgrades dating back to 2017.
In addition, with Tesla sales plunging in European markets, 46,000 Cybertrucks being recalled in the US, and Tesla vehicles being vandalised worldwide, JPMorgan has just lowered its end-2025 price target for Tesla from $135 to $120 a share. That’s a fall of more than half (-51.8%) from here.
Finally, Tesla’s value might lie elsewhere, having committed to spending many billions on artificial intelligence, robotics, and self-driving vehicles. Whatever the outcome, I’m sure exciting times await Tesla and its shareholders!
