The first thing to say is that my original once-in-a-lifetime chance to buy Tesla (NASDAQ: TSLA) shares was five years ago, when I first ran the rule over the US electric car maker. They’re up 887% since then, which would have turned £5k into £49,350. I try not to dwell on it.
Thereafter, I’ve always had the nagging feeling that I’d left it too late. I feared the fanboy hype. I feared Elon Musk’s big mouth. Mostly, I feared the crazy overvaluation, which saw Tesla’s price-to-earnings ratio top 1,000 at one point.
Why take the risk, when I could load up on undervalued FTSE 100 dividend stocks at less than 10 times earnings (and get a decent yield to boot)? I have my answer. Tesla stock may be a roller-coaster ride but most investors wouldn’t have missed it for the world.
Tesla is looking better value
Suddenly, I have another chance. The Tesla share price has crashed 26.57% so far this year. It’s down 5.25% over 12 months to trade at $183 as I write this.
I can’t go back in time and buy Tesla five years ago. But I can but its shares today. They’ve been hugely volatile in the past and recovered, as we saw last year.
Tesla’s January update hastened the sell-off, as auto revenue rose just 1% over the year. Q4 revenues grew just 3% to $25.17bn, trailing estimates, while the company warned vehicle volume growth in 2024 “may be notably lower”.
It’s been a tough year for Tesla, which slashed prices to beat off competition from cheap Chinese imports. This market leader turns out not to have a particularly deep moat. It does have Musk, though, which may be a mixed blessing but his many critics have to answer this question: where would Tesla be without him? We all know the answer.
Time to get behind the wheel
Many fear he has too many distractions, including X (formally Twitter), SpaceX, self-driving tech, and his latest squeeze, humanoid robot Optimus. Markets are wary of his stated desire to ramp up his Tesla ownership share to 25%, to give him the voting control required to turn the company into a “leader in AI and robotics”. They fear a power kick.
Much rests on the next generation of Tesla vehicles, including the long-awaited Cybertruck. That one really could go either way. As could self-driving vehicles, now generating pushback. Tesla faces competition in this space from Alphabet-owned Waymo. On the other hand, Apple has pulled out.
One thing hasn’t changed about Tesla. It’s not like other stocks. Investors either believe, or they don’t. I’ve ever been a true believer of anything, much. I wasn’t brave enough, either. Turns out I was a cautious/medium-risk investor after all. Boo.
With retirement just 10 years away, I’ve just been given one last chance to get in there. I’ll buy Tesla. It’s a bit hit and hope, but there it is. The only question is what do I sell to buy it? I’ve got £5k in a gilts ETF that’s going nowhere (and very, very slowly). Time for a change of pace.
The post Down 27% in 2024! Is this my once-in-a-lifetime chance to buy Tesla shares? appeared first on The Motley Fool UK.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Alphabet, Apple, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
