Tesla (NASDAQ: TSLA) is very much a momentum stock. When it’s hot it’s hot, but when it loses its mojo, it can be a bit of a car crash.
Right now, it’s fair to say that the growth stock is struggling. Here’s a look at how much £5,000 invested in Tesla on Christmas eve would be worth now.
Fast losses
On 24 December, Tesla’s share price ended the day at $485 (within a few percentage points of its all-time high). So, let’s say that an investor bought £5,000 worth of stock at that price (perhaps they got caught up in the hype as the stock raced higher).
Today, that money would now be worth about £4,100 as the share price has fallen significantly. Note that I’m factoring in GBP/USD exchange rates here – they’ve offset some of the losses.
What’s happened?
What’s gone wrong here for investors? A few things.
For a start, market conditions have changed dramatically. Back in late 2025, the market was flying and investors were very bullish on tech stocks. Today however, the market is under pressure due to geopolitical and economic uncertainty. Sentiment towards tech stocks (especially ones with high valuations like Tesla) has also cooled.
It’s worth pointing out that economic uncertainty is an issue for Tesla. Because if the economy takes a turn for the worse, it will almost certainly lead to a slowdown in car sales. During recessions, consumers tend to hold back on big purchases. So, Tesla’s electric vehicle (EV) sales are potentially at risk.
Another issue for the company is high oil prices. This is a problem for several reasons. First, car manufacturing is an energy-intensive process. Second, a lot of car components (dashboards, seat trims, tyres, etc) are petroleum based. Put these two factors together and the company could potentially be looking at much higher costs in the near term (and therefore lower profits).
Additionally, competitive pressures are rising. Today, there are lots of alternatives to a Tesla EV and companies like BYD and Volkswagen are capturing market share.
Finally, company results have been weak. For the fourth quarter of 2025, revenue was down 3% year on year (automotive revenue was down 11%) while non-GAAP earnings per share was down 17%.
Worth a look today?
Is the stock worth a look while it’s well off its highs? Well, it could be – history shows that it has recovered from pullbacks in the past (many times).
Note that the company still has plenty of long-term growth potential. Today, Tesla is not just an EV story. The narrative is about self-driving cars, humanoid robots, energy storage, and AI infrastructure.
Personally though, I won’t be buying. For me, the valuation is still too high – the forward-looking price-to-earnings (P/E) ratio is about 190 right now.
I could be interested in buying the stock at a later date. However, I want the P/E ratio to be well under 100.
