Oppenheimer’s Colin Rusch has warned that some investors may prioritise SpaceX shares over Tesla, which could distract from the stock. The shares are already down 28% from recent highs, so timing matters.

Yet the falling share price doesn’t seem to reflect performance. In Q1 2026, it delivered 358,023 vehicles globally and produced 408,386. Meanwhile, its US business sold 117,300 vehicles and took 54.2% of the American EV market, according to the latest reports.

Musk even mocked rival carmakers by asking, “what happened to all the Tesla killers?” after it outsold every other EV maker combined in the US market.

With so much conflicting data, what’s actually going on?

A sceptical market

Strong sales or not, the share price hasn’t had a great run lately. Tesla’s the worst-performing stock in the Magnificent Seven so far this year, which suggests investors aren’t convinced despite its market dominance.

Yet even with the fall, the stock still trades on a very rich valuation, with a price that’s hundreds of times higher than earnings. That leaves little room for disappointment if deliveries, margins, or investor sentiment soften.

Again, very conflicting data. Essentially, it was once so popular that it remains overvalued even after a months-long sell off.

Recovery potential?

The latest annual figures show why Tesla remains a polarising stock. In FY2025, it reported operating cash flow of $14.7bn, free cash flow of $6.2bn, and cash and investments of $44.1bn. Figures that give it a strong balance sheet and plenty of flexibility.

It also pays no dividend and is unlikely to anytime soon. Musk prefers to reinvest earnings into growth rather than distribute them. Still, for long-term investors, the bull case remains in place — it has scale, brand power, and a growing energy business. Plus, lower rates could help both car demand and valuation multiples over time.

The bear case is just as clear: the auto market’s cyclical, competition’s fierce, and Tesla’s valuation already prices in a lot of success that has not yet fully arrived.

So is it worth considering?

With Tesla looking increasingly like a high-risk growth bet rather than a comfortable long-term holding, I’m wary of considering it now. If the SpaceX IPO hype pulls attention and money away, the shares could stay volatile or drift lower in the near term.

Better options on the US market right now may be more fairly valued firms with clearer earnings and dividends, especially for investors who want steadier returns rather than a story stock.

A few I like the look of recently include HR software firm PayChex, snack giant Mondelez, and utility giant Duke Energy. They’re all very different to Tesla: fairly valued, low-risk, and income-oriented. Just the kind of things I look for when markets get wobbly. 

The post SpaceX’s IPO threatens to leave the Tesla share price on the forecourt appeared first on The Motley Fool UK.

So, what’s going on here? And has the recent share price weakness created an opportunity?

A perfect storm of risks

Taking a look under the bonnet, there are actually multiple factors behind the recent drop in the stock. It seems Tesla has been hit by a perfect storm of risks this year.

For a start, operational performance has been poor. In the first quarter of 2026, for example, the company produced 50,000 more vehicles than it delivered (408,000 versus 358,000) – the widest gap in at least four years.

This suggests that demand for its EVs is weakening (intensifying competition, an ageing product line-up, reduced incentives, and political polarisation are some factors here). And demand could come under more pressure if high oil prices hit the economy – in a recession car sales tend to plummet as consumers hold off on large purchases.

Speaking of oil prices, if these remain high, they could also hit Tesla’s profit margins. Not only could the company find itself paying more for energy, but it could also see a rise in component costs (tyres, seats, dashboards, etc).

Another threat to profit margins is the company’s plan to develop a smaller, lower-cost EV. A smaller car may help it fend off competition from the likes of BYD and Volkswagen, but it’s likely to come at a cost in terms of profitability levels.

Market forces are hurting Tesla

Looking beyond operational performance, there are also several market forces impacting Tesla stock at the moment. Generally speaking, 2026 hasn’t been a great year for growth stocks so far.

This is especially true of growth stocks with high valuations and Tesla has a price-to-earnings (P/E) ratio of about 175. Investors just don’t have the appetite for these types of stocks right now.

Finally, one other issue that can’t be ignored is a potential SpaceX IPO. SpaceX is Tesla CEO Elon Musk’s space company.

I imagine that some investors are pulling their money out of Tesla in preparation for this IPO in the hope of making Tesla-like long-term gains. Note that Musk plans to open up this IPO to US retail investors in a big way.

An opportunity?

Is there an investment opportunity to consider here? I’m not convinced there is… yet.

In my view, the stock is still too expensive. Considering the level of competition Tesla is facing – not only in EVs but also in self-driving vehicles and humanoid robotics – a P/E ratio of 175 doesn’t make much sense to me.

It seems analysts at JP Morgan share my view. Right now they have an Underweight rating on the stock and a price target of $145 (about 60% below the current share price)

Now, I don’t know if Tesla will hit that price – it’s possibly a little too bearish given the company’s long-term potential in areas such as self-driving, robotics, and AI. But I do think there’s the possibility of further share price weakness in the near term, so I’m steering clear of this one for now and focusing on other opportunities in the market.

The post Why is Tesla stock down 30% since late 2025? appeared first on The Motley Fool UK.

But has this secretly created an amazing buying opportunity for my portfolio?

What’s going on with Tesla?

Tesla’s currently being hit by multiple converging headwinds. Rising competition from rival EV manufactures, most notably BYD, is putting pressure on the firm’s pricing power and market share, most notably in China and Europe.

At the same time, CEO Elon Musk’s politically polarising involvement with the Trump administration has also resulted in brand damage and alienation of part of its ESG-oriented customer base – the impact of which has only been compounded by the loss of tax incentives in the US.

The result? First-quarter deliveries for 2026 missed analyst targets, falling close to 14% versus the last quarter of 2025, with 50,000 vehicles being added to unsold inventory. As such, a growing number of institutional investors have been heading for the exits. And yet, there are some notable exceptions.

American investor Cathie Wood is a notorious Tesla bull and has been using the recent share price weakness as an opportunity to buy even more shares. So what does she see that others don’t? And should I follow in her footsteps?

A hidden 7x growth opportunity

The bull case for Tesla among institutional bulls like Wood rests on a fundamental reframing of the business. Tesla isn’t just a carmaker – it’s a robotics and AI company.

Autonomous robotaxis and humanoid robots are expected to enter commercial production later this year. And Tesla’s positioning itself at the forefront of two brand new industries. And as the group’s historical track record shows, Tesla knows how to make the most of a first-mover advantage.

Combined, these markets present a new multi-trillion-dollar long-term opportunity for the business. And it’s why Wood’s placed a whopping $2,600 share price target by 2029 on Tesla stock. If she’s right, that’s a potential 657% return over the next three years – enough to turn £5,000 into a whopping £37,873!

Risk versus reward

This explosive potential comes with a huge caveat. Tesla’s discontinuing production of both its Model S and Model X EV models as of the second quarter of 2026. That will make room for the production of its Optimus robots. As such, Tesla’s effectively abandoning a premium spot in the EV market in favour of its new ventures.

Needless to say, voluntarily giving up market share in favour of a brand new, still-unproven technology is a big gamble that could backfire spectacularly if Optimus fails to live up to expectations. With that in mind, it isn’t surprising to see most institutional investors retreat.

There’s no denying the firm’s explosive potential. But even after the recent sell-off, the share price still trades at a premium valuation. This suggests some of this expected growth is already priced in. And that opens the door to even more volatility if the company fails to deliver.

That’s why, personally, I’m staying on the sidelines for now. But for those with a high risk tolerance and high conviction in Musk’s leadership and strategy, taking a nibble might be worth considering.

The post Prediction: by 2029, £5,000 invested in Tesla stock could be worth… appeared first on The Motley Fool UK.

But with the EV pioneer valued above $1trn today, I think it’s fair to assume that Tesla returns will be far less dramatic in future. Investors have probably missed the battery-powered boat when it comes to life-changing gains there.

But what about NIO (NYSE:NIO)? The firm gets called the ‘Tesla of China’, owing to its similarities in the premium EV segment. In New York, it has a far lower $15bn market cap, and has just reported its first-ever quarterly profit.

Might this one emulate Tesla’s incredible wealth-making success?

Similarities

Up by around 110% in the past year, NIO stock has already made some savvy investors solid returns. But over five years, it’s still down by 83%, while Tesla has gained roughly 55% (both in US dollar terms).

Looking at NIO, I do see some similarities to Elon Musk’s EV firm. First off, they’re both very innovative, with NIO building out its own battery-swapping stations. There, subscribing customers can swap a battery for a new one in just three minutes on average.

February saw NIO achieve a milestone of 100m battery swaps. According to the firm, these have saved users a total of 83.41m hours, averaging over 88 hours per user, compared with conventional EV charging. 

There are now 3,790 NIO battery-swap stations worldwide, with around a third on major highways in China.

Interestingly, the company is opening up its network with other EV firms, which reminds me a little bit of Tesla opening up its Superchargers to rivals. Both were built to address range anxiety (still an obstacle to wider EV adoption).

Meanwhile, NIO has finally swung to a profit after years of losses (like Tesla). In Q4, it reported a net profit of RMB 282.7m (about $40m), a vast improvement on the year before. Revenue surged 75.9%, boosted by new and refreshed models.

Finally, NIO is big on AI, with its vehicles having a physical AI companion (NOMI) on the dashboard. Obviously Tesla is all-in when it comes to this technology (robotaxis, humanoid robots, and what not).

Differences

That said, I think AI gets to the heart of the difference between NIO and Tesla. The latter has always been valued on being more than an EV maker, especially today as it moves closer towards mass-manufacturing robotaxis and robots.

Also, back when these projects were still twinkles in Musk’s eye, Tesla had much of the EV market to itself. There was far less competition and its international growth was largely unimpeded, including in China.

In contrast, NIO is likely to face significant trade barriers in the US and Europe moving forward. And it’s likely to always be valued as an EV maker rather than transcending the category like Tesla has.

Another key difference is the discount that investors place on Chinese stocks because of geopolitical risk. At any point, Beijing can change the rules of the game, sending investors fleeing for the exit.

As such, I don’t see NIO as the next Tesla. The stock could still do well, especially if NIO becomes consistently profitable.

But neither is on my buy list today. I see better growth stocks elsewhere for my portfolio.

The post Is NIO stock the next Tesla? appeared first on The Motley Fool UK.

But some believe there’s another threat to global equity prices, one that’s already starting to touch our lives. Could the rise of artificial intelligence (AI) really lead to a devastating stock market crash, or has the threat been exaggerated?

Doomsday?

One firm has outlined a scenario – not a prediction – in which machines replace a huge number of workers, unemployment soars, consumer spending weakens, the mortgage market goes into meltdown, and many banks collapse.

Nobody knows for sure whether the “human intelligence displacement spiral” as outlined by Citrini Research will become a reality. However, if it did, it expects the S&P 500 to fall 60% from its peak.

On the other hand…

However, I’m more positive. History shows that people and corporations have adapted to similar challenges before. It’s often said that we are starting a fourth industrial revolution. And to the credit of humankind, we’ve managed to survive the previous three.

There are loads of examples I could use to illustrate how life continues as normal in the face of radical change. Here are just two. In 1920, 1.19m people (10% of UK males) were employed in the coal industry. In 2025, it was 267. Despite this, we can still heat our homes and run a railway network.

And more recently, traditional high street retailers have overcome the threat of the internet. Yes, some have gone bust but many have survived by embracing the challenge.

As with nature, neither the strongest nor the most intelligent survives in the world of business. Instead, it’s the most adaptable. Remember, Netflix started life in 1998 as a DVD rental company. IBM used to make computers.

A visionary to invest in?

And Elon Musk probably thought he had joined a car company when he first became involved with Tesla (NASDAQ:TSLA) in early 2004. Now, as a great example of adapting to survive, it’s being repositioned as a robotaxi/robot/energy storage business.

Personally, I’m unconvinced that we need to replace taxi drivers. And will humans be stupid enough to let themselves be usurped by robots? I don’t think so.

But many people love Musk’s visionary approach, which — I suspect — is the primary reason why Tesla’s stock trades at an eye-wateringly high historic earnings multiple of over 300.

Of concern, vehicle sales are falling and inventories are growing in the face of intense competition from around the world and the phasing out of US tax credits.

Final thoughts

Of course, unlike the technological advances associated with previous revolutions, AI’s able to undertake both physical and mental tasks. It’s likely to be our toughest challenge yet. And inevitably, there will be lots of losers. But could Tesla be one of its winners? Probably. But there are no guarantees.

However, despite analysts reckoning the company’s 30% undervalued, the stock’s not for me. Investors appear to be placing huge value on some unproven technology.

Fortunately, for those of us looking to build long-term wealth via the stock market, there are plenty of other listed businesses that — I believe — have more chance of succeeding, including ones offering better value than Tesla. That’s why I remain optimistic.   

The post Could AI bring on the mother of all stock market crashes? appeared first on The Motley Fool UK.

Tesla delivered 358,023 vehicles in the first quarter. That missed Wall Street expectations of around 365,000 by roughly 7,600 units.

That’s not a huge miss, but there’s an unpleasant detail buried in the figures as Tesla produced 408,386 vehicles during the same period. That means there’s over 50,000 cars built but unsold — a growing inventory pile that points to a demand problem, not a logistics hiccup.

So should investors care? Yes and no. The reason why is actually more interesting than the delivery numbers themselves.

Tesla: a car company?

If you’re trying to value Tesla as a car company, you’re already asking the wrong question. At least according to Elon Musk. The bull case for Tesla has almost nothing to do with how many Model Ys roll off the line in Fremont.

It’s about robotaxis, Optimus humanoid robots, and an energy business growing faster than the automotive division.

The fully autonomous robotaxi network — if it ever arrives at scale — would be a completely different business. This would be a software and services operation with margins that traditional automotive companies just can’t compete with.

Optimus, Tesla’s humanoid robot, is another high-potential project. In fact, Musk has suggested it could eventually be the company’s primary product.

And, of course, Tesla’s just part of Musk’s wider business empire. Musk wants to colonise the Moon and Mars — now in that order — and Tesla’s robots would be sent to into space, ahead of human populations, to start the colonisation process.

So there’s a space element too which not a lot of people realise yet.

Valuation disconnect

The problem is that the stock already prices in a great deal of that future — aggressively so. Tesla trades with a price-to-earnings ratio of 155 and price-to-earnings-to-growth (PEG) of 3.8. For context, Nvidia — the lynchpin of the artificial intelligence (AI) revolution and with many investments in robotics — trades at just 19 times earnings with a PEG of 0.5.

To justify the current price, you essentially have to believe the robotaxi network works, scales quickly, and isn’t regulated out of existence. You have to believe Optimus ships in volume. You have to believe Tesla keeps its software edge.

That might all happen — but it’s a lot to assume.

My bottom line

I love my Model Y. I genuinely admire what Tesla has built and believe it or not, I’m a Musk fan — he’s undoubtedly the greatest entrepreneur of his generation. However, I invest in obviously undervalued companies — ones where I don’t need a decade of perfect execution to make money. Tesla, right now, isn’t that.

It’s a fascinating company with a price that reflects extraordinary optimism. It might be worth considering, and I’m occasionally tempted, but there are other opportunities that better fit my strategy.

The post Tesla stock just got a little cheaper, but why? And should anyone care? appeared first on The Motley Fool UK.

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.

The post £5,000 invested in Tesla stock on Christmas Eve is now worth… appeared first on The Motley Fool UK.

That means a £10,000 stake would have grown to roughly £13,600. That’s a gain of £3,600, or around 36% in dollar terms before sterling’s rise trims things back slightly.

So, what changed to deliver such an uplift?

It definitely wasn’t undervalued

Was Tesla stock clearly undervalued a year ago? Absolutely not.

The stock was trading around 100 times forward earnings. It’s worth noting that it was a particularly volatile week this time last year as Trump’s Liberation Day tariffs ripped through global markets.

At that valuation, a lot of analysts would have said the market was already pricing in near-perfect execution on autonomous vehicles, robotaxis, and energy storage. These were businesses that remained largely unproven.

For a company facing intensifying EV competition, shrinking margins, and a CEO whose attention was visibly divided (as head of DOGE), “undervalued” was the last word most serious analysts would have reached for.

Interestingly, that outlook picture hasn’t exactly improved since. Sales have softened in key markets and the brand has taken on political baggage that’s proving difficult to shake.

If anything, the bull case has narrowed somewhat. It’s now resting almost entirely on robotaxi and AI ambitions that seemingly remain years from meaningful revenue.

For some, that narrowing might have been a good thing. It makes the investment thesis a little easier to understand. What’s more, the rift between the president and Musk was short-lived, perhaps contributing to the thesis.

However, one thing is clear, the stock is disconnected from the valuation. It trades at 156 times forward earnings today, with a price-to-earnings-to-growth (PEG) ratio of 3.6. Investors are betting on technological dominance.

Ahead of the rest

Tesla is clearly a leader, if not the leader, in autonomous driving. Its Full Self-Driving software has logged more real-world miles than virtually any competitor, and the data advantage that comes with its scale is genuinely hard to replicate.

Waymo may be grabbing headlines with its robotaxi rollout, but Tesla’s fleet is orders of magnitude larger. If autonomous driving becomes the defining technology of the next decade, Tesla will likely be first in line — and markets, it seems, are willing to pay handsomely for that possibility.

And in the long run, Musk wants to go further — literally.

His vision extends to Moon and Mars colonisation, with Tesla’s Optimus humanoid robot potentially forming the labour backbone of those civilisations. It’s a breathtaking ambition, and Optimus has shown genuine early promise on the factory floor.

However, these are long-term bets. I think Tesla is worth considering for investors who believe in Musk’s grand vision — but the valuation offers no backstop. This is why I haven’t taken the plunge yet: the price demands that most of this comes true, and there’s no margin of safety, no floor to fall back on if it doesn’t.

The post £10,000 invested in Tesla stock 1 year ago is now worth… appeared first on The Motley Fool UK.

Should I do so?

A business with long-term proven performance

It is easy not to be surprised that Tesla stock is tumbling, as the company has had multiple challenges in recent years – and I will come to that in a moment.

But the reality is that, even after the recent share price slide, Tesla’s long-term performance has been positive.

Tesla stock is 34% higher over the past year alone. That comfortably outpaces the 13% gain seen in the S&P 500 index during that time.

Over five years, Tesla is up 78%.

For someone who bought Tesla stock when it first started trading in 2010, the gain has been even better: a phenomenal 28,638%.

Now, it goes without saying that past performance is not necessarily a guide to what to expect in future.

But since there is never a shortage of people willing to offer a critical view of the Tesla investment case, I think it is worth remembering that the company, currently commanding a $1.1trn market capitalisation, has been responsible for some serious value creation.

Tesla’s at a crossroads

Why, then, has Tesla stock tumbled lately?

As I see it, the decline reflects uncertainty about where the company might go from here.

One way to value it is based on its current business. While it has a power generation and storage business that is doing well, Tesla’s bread and butter is its car business.

Its car sales volumes have fallen for two years in a row. By eliminating some models from its already limited lineup, I think it could lose more potential sales.

Meanwhile, rivals like BYD have been taking share in many markets (it now outsells Tesla worldwide). The end of key tax credits in the US has negatively transformed the economics of Tesla’s car business.

Putting all that together, I do not see a justification for a market cap anything close to $1.1trn.

Clearly, though, some investors do, hence the current market capitalisation. Rather than focussing on the existing business, their investment case is largely about the road ahead.

Lots to prove – and no guarantee of success

That road ahead does sound like it is full of potential, from self-driving taxis to robotics.

Tesla’s history has demonstrated that it can bring innovative technology to market at scale in a short timeframe. Add to that some of its other existing capabilities, from autonomous driving software to manufacturing, and Tesla clearly has a strong opportunity to do well in such emerging fields.

But – crucially, in my view – so do other companies. A lot of other companies.

In fact, many firms have already made greater strides, both in self-driving vehicles (BYD is one of them) and robotics.

Tesla’s ambitions at this point are relatively early stage. They are a long way from commercialisation at scale – and may never get there.

Even after the stock price fall, though, Tesla looks priced for massive success. I think it is overvalued, so will not be investing.

Fortunately, there are other tech stocks that I think currently offer much better potential value…

The post Tesla stock’s down 19% this year. Time to buy? appeared first on The Motley Fool UK.

That’s not a bad result by any means – it’s far better than what someone could have made by leaving money in cash. But there are a couple of things investors need to note.

Returns

Investing is about owning shares in a company and earning a return from the cash the business makes. But that isn’t what’s happened with Tesla shares recently. 

Over the last five years, Tesla has generated a total of $12.67 in earnings per share (EPS). With the stock trading at $231 in March 2021, that implies only a 5.5% return.

Source: Fiscal.ai

In other words, shareholders have done well because investors have been bidding up the stock rather than as a result of huge EPS growth. 

The firm made $1.63 in 2021 and $1.08 in 2025. That makes the stock trading 69% above where it was five years ago look unjustified – but that might not be the case.

Opportunity cost

As a company, Tesla isn’t really about incremental gains. It’s focused on big initiatives – autonomous vehicles and humanoid robots – that have huge potential, but aren’t profitable yet.

From a valuation perspective, it matters how long it’s going to be until those projects fulfil their potential. While investors wait, their money could be earning a return elsewhere. 

That means the sooner Tesla achieves its ambitions, the more the stock is worth today. And on the – big – assumption the firm will get there eventually, it has to be closer than it was in 2021.

As a result, the share price going up over the last five years might not be entirely unjustified. As the company’s projects get closer to reality, the opportunity cost of waiting goes down.

Any day now…

Tesla shares obviously trade at high multiples, but the company’s shareholders aren’t focusing on what’s been happening – they’re focusing on what’s to come. And rightly so.

For the stock to stay where it is, management needs to convince investors that the grand plans are progressing. Importantly, it probably also needs to get them to think that they’re not far off.

Tesla doesn’t have a great track record when it comes to timelines for new projects. Elon Musk has admitted as much and this makes reassuring investors a challenge.

There have been signs of positive sales growth in both China and Europe recently. But while this is a good thing, investors who own the stock at today’s prices aren’t just in it for the cars. 

High-risk, high-reward?

Tesla isn’t the type of company that’s likely to grow consistently at 15% a year for the next decade. It’s also not the type of business that’s going to pay a reliable dividend any time soon.

Anyone who wants those types of investment should think about looking elsewhere – which is what I’m doing. But that doesn’t mean the stock isn’t worth the attention of some investors.

If Tesla one day achieves its stated ambitions, nobody’s going to care that EPS in 2025 was lower than 2024. And if that day is coming at some point in the future, it’s only getting closer.

The post £1,000 invested in Tesla stock 5 years ago is now worth… appeared first on The Motley Fool UK.