Mention Tesla Inc (NASDAQ: TSLA) shares to any group of active investors and you’re likely to get two strikingly different reactions.
Among my professional investor friends and colleagues, roughly half have been bearish on Tesla shares across the past five years. They believe the company is built on too much hype, most of its surrounding the company’s eccentric billionaire founder Elon Musk.
The bears will also point out that Tesla is valued at more than many international car companies that produce far more vehicles each year.
The other half of the investor crowd takes an almost polar opposite view. And with equal vehemence.
They’ll point out that Tesla shares, which trade at a price-to-earnings (P/E) ratio of 50 times, are priced with future earnings in mind. Indeed, Tesla is investing in numerous technologies of tomorrow, including self-driving cars, its new energy storage ‘Megafactory’ in Shanghai and a range of AI-enabled products.
And while total vehicle production still lags the likes of Ford and Toyota, Tesla’s first quarter production of some 440,000 vehicles was up 42% year on year. That saw revenue increase 24% to US$23.3 billion.
And in a sign of the company’s international reach, the Tesla Model Y was the best-selling EV in Europe and the United States in the first quarter of 2023.
Which, in an admittedly roundabout way, brings us back to the question at hand.
If I’d invested $10,000 in Tesla shares five years ago, how much would I have today?
Tesla shares offered long-term investors a volatile ride to riches
Before the big reveal, it’s worth noting that most every investor, bear and bull alike, will agree that if you’re holding onto Tesla shares you’ll need to be prepared for some serious volatility.
Here’s what I mean.
If I’d bought $10,000 worth of stock at the beginning of 2022 and sold at the very end of the year I would have lost a painful 65%. In other words, I’d be left with $3,494 of my hard-earned money.
If, on the other hand, I bought shares at the very end of 2022 and was still holding them today, I’d have pocketed a gain of 59%. Meaning my $10,000 investment would now be worth $15,900.
Now, if I’d bought into the pioneering EV producer five years ago, and held them through the 2022 retrace and the 2023 rebound, I would have seen those Tesla shares gain a stellar 756%.
That would see my $10,000 investment balloon into $85,600.
So, are Tesla shares still a good buy at today’s price?
That depends on which group of investors you ask!
