Tesla (NASDAQ: TSLA) stock has underperformed quite badly in 2025. Year to date, it’s down about 25% (while the S&P 500 index is up a few percentage points).
Is this an opportunity to buy the growth stock for my portfolio at a good price? Let’s discuss.
Why retail investors love Tesla shares
Tesla remains a retail investor favourite. And I can understand why.
For starters, legendary entrepreneur Elon Musk is the CEO. With Musk at the helm, this company could potentially achieve great things in the long run — not just in vehicles but also in other areas of technology such as artificial intelligence (AI) and robotics.
Meanwhile, the company is very close to rolling out its much anticipated self-driving ‘robotaxis’. It plans to launch these later this week in Austin, Texas on 12 June.
A lot of risks
When I take a closer look at the company, however, things look a bit shaky from an investment perspective today.
Recently, Musk has upset a lot of people, including US President Donald Trump (they had a major bust-up last week). This appears to have done some serious damage to the brand for now.
Also, Tesla has a lot of competition in the electric vehicle (EV) space. And it seems that many consumers are opting to purchase vehicles from other brands.
In May, for example, Tesla’s UK sales were down 36% year on year while BYD’s sales were up 407%. That’s rather concerning.
Robotaxi uncertainty
I’m also a little sceptical about the robotaxi launch.
Many investors are looking at this event as a major catalyst for a share price jump. However, I think it may actually be a ‘sell the news’ type of event (i.e. the opposite of a positive catalyst).
I reckon it’s going to take a while for this service to be rolled out at scale. And I think it’s highly likely that there will be setbacks along the way.
Meanwhile, there are other businesses with self-driving taxis on the road already. Alphabet’s Waymo, for example, has already done 10m rides in the US.
So, it’s not like Tesla is going to have a monopoly in the autonomous taxi market any time soon.
A sky-high valuation
The other issue for me is that the stock’s valuation looks a little crazy. At present, Tesla trades on a forward-looking price-to-earnings (P/E) ratio of about 150.
I could probably justify a P/E ratio of 50 here given the level of innovation (that’s more than twice the US market average). But I can’t get to 150 given the risks associated with brand damage, near-term EV sales, and robotaxi competition.
My move now
Putting this all together, I won’t be buying Tesla stock for my portfolio right now. In my view, it’s too risky at its current share price.
I will be keeping an eye on it though. If the company’s robotaxis are successful, and the valuation comes down, I could be interested in taking a small position as a speculative investment.
