Few companies divide investor opinion quite like Tesla (NASDAQ: TSLA). Over the years, Tesla stock has been on a roller-coaster ride.
However, since the start of 2025, the stock has moved up by just 10%. That is still a positive direction of travel, but it is less than the rise in the S&P 500 index during the same period.
Could the stock’s glory days be over – or might now be the time to add it to my portfolio?
Investing in overseas shares and currency risks
Before going on, it is worth mentioning that that 10% gain was in the dollar-denominated value of Tesla stock. That makes sense, as the company is listed on a US stock exchange.
But last year saw the greenback lose close to that amount in value against the pound. The dollar is currently around 9% weaker against the pound than it was when 2025 began.
So, taking currency movements into consideration, £10,000 invested in Tesla at the start of last year would now be worth little more than… £10,000! Tesla does not pay a dividend so there would have been no income along the way.
Currency movements are always a factor to consider when investing in overseas shares (or, indeed, UK shares that earn a lot of their money in a currency other than sterling).
Sometimes they work to British investors’ advantage, not disadvantage.
Tesla’s wild ride
For a growth company, that 10% stock price growth last year might seem unremarkable.
But Tesla stock moved around a lot in 2025.
For example, an investor who bought in when the share tumbled in April would now be sitting on a 99% paper gain.
That reflects the fact that 2025 was a year of notable ups and downs for the company.
2024 had been the first year in which the company’s sales volumes declined year on year, albeit only slightly. But the first six months of last year saw sales volumes fall dramatically.
Conversely, the third quarter saw record vehicle sales volumes — and a record performance for the company’s power storage division.
That seesawing business performance reflects shifting consumer sentiments, the unwinding of key vehicle tax credits in the US, and an increasingly competitive electric vehicle marketplace.
Performance remains inconsistent
The power division’s deployment in the fourth quarter was again an all-time record.
But vehicle deliveries for the quarter fell 15% year on year. That suggests that the prior quarter’s record performance may have been a one-off as US customers rushed to buy before tax credits ended.
The power business is doing well, but the car business seems to be showing the strains of an increasingly tough operating environment.
Meanwhile, other activities like self-driving taxis and robotics remain ideas in trial, not proven businesses.
I won’t be buying!
Given that, I think the current Tesla stock valuation looks too high.
The company sells for 296 times earnings – even before taking into account the likely fall in earnings caused by the risks to the car business’s profitability that I outlined above.
The company has a large installed base of drivers, proprietary technology, and room for ongoing growth in power storage.
But its $1.4trn market capitalisation looks unjustifiable to me. I will not be investing.
