I think it’s fair to suggest President Trump has been a mixed blessing for the Tesla (NASDAQ:TSLA) stock price. The November election triggered a boom. But it quickly turned into a slide, partly due to dissatisfaction with CEO Elon Musk’s new political activities.
After the 2 April tariff shock, Tesla stock fell to a 2025 low of a few pennies above $214 during the day on 7 April. That’s a 56% crash from December’s all-time high of over $488.
But since then, with an all-out trade war with China seemingly averted, Tesla has put on a little over 62%. It’s well below its previous highs but many people (me included) think December might have been an over-optimistic aberration.
The gain since the bottom would have turned £10,000 into more than £16,200.
Pay deal
Politics aside, what’s been happening to Tesla itself? For one thing, it looks like Musk is set to return to a more active role at the head of the company. And love him or hate him, Tesla shareholders do seem to think the company would fall apart without him.
To that end, it seems negotiations for a new pay deal for the company leader are on the table. It’s up against a Delaware court that ruled against a 2018 package worth up to around $56bn. But Musk has argued that he needs to own at least 25% of the stock in order to protect the company from activist investors.
Robotaxi
Tesla intends to launch its robotaxi service in June in Austin, Texas. But those plans might face a setback regarding safety folllowing several crashes, including a fatal one in 2023. The National Highway Traffic Safety Administration (NHTSA) has presented the company with a list of things it wants answered by 19 June.
The NHTSA, it seems, is concerned about the low-light performance of Tesla’s full self-driving tech, which relies largely on optical cameras. Others, including competitor Waymo, a subsidiary of Google parent Alphabet, include LiDAR in their systems.
Meanwhile, progress in trade talks opens the way for Tesla to resume importing components for its Cybercab and Semi trucks from China.
What to do?
What does all this mean for investors, and potential investors? Well, despite the volatile recent past, Tesla stock has still gained 550% in the past five years.
And it’s a mistake to see Tesla as just an electric car maker. It’s also pioneering a lot of the technology behind it, including energy storage, artificial intelligence, robotics… And a growing number of global companies are increasingly relying on all of that.
I see a lot of potential for the decades ahead here, above just car sales.
But I can’t ignore the stock valuation. We’re looking at a forward price-to-earnings (P/E) ratio of 218. Granted, it would fall to around 100 on 2027 forecasts. But still… gulp!
Tesla’s valuation makes it too much of a risk for my own money. But I think investors in high-tech growth stocks could do well to consider it.
