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Tesla (NASDAQ:TSLA) shares are ridiculous. Investors love them and will find any excuse to pile in. I don’t blame them. This is a high-profile company, with the most famous CEO in the world, and it keeps proving the sceptics wrong.
There are plenty of reasons why the Tesla share price should go into meltdown, and it’s done that from time to time. But it always bounces back – at speed.
What a stock this is
My investment portfolio is built primarily on FTSE 100 dividend stocks, which are the total opposite of Tesla. They look cheap, often trading at less than 10 times earnings compared to Tesla’s 77 times. They yield between 5% and 10% a year. Tesla has no dividend. Their share prices and reinvested dividends will take years to compound and grow. Tesla has just rocketed another 50% in a month. It’s up a total of 141% year-to-date.
No wonder investors love this one. It’s a bumpy ride but last year’s sell-off is now moving out of the rearview mirror. Over 12 months, the stock is up 20%.
The best time to buy Tesla is during one of its troughs rather than its spikes, like the one we’re seeing today. There’s a problem with that strategy, though. I decided the share was toppy a month ago and look what it’s done since.
The latest Tesla frenzy is being driven higher by the excitement surrounding AI. There’s a real story here, but a lot of fluff and hype as well. Valuations now look stretched. I’ve just seen a headline saying Tesla is the most overbought stock on the market. I’m sure that’s true. It was probably true last month, too.
Tesla is pushing forward on all sorts of fronts. It has just produced its 10 millionth 4680 cell at Giga Texas. Elon Musk is still pushing for his autonomous driving breakthrough, which he reckons will determine the stock’s long-term value.
The Model Y saw more new sales than any vehicle except the Ford F-150 during the first three months of this year. The US supercharging network is growing fast.
It’s a personal thing
Tesla also faces huge challenges, as rivals such as Ford and General Motors are coming up in the outside lane of the EV market. Bank of America reckons Tesla’s share of the US market will drop from 62% to 18% by 2026. On the other hand, it will be a much bigger market. Twitter remains a distraction for Musk (although maybe not as much as before). So do a host of other mad crazy projects that might just work.
I can find a host of reasons to pour my portfolio into Tesla, and a host of reasons to shun it. That said, Tesla buyers are mostly winners, and I’m not one of them.
Stocks like this one play games with the mind. At the start of the year, the Tesla share price was plunging so I thought it looked too risky to buy. Today it’s flying and guess what? I still think it’s too risky to buy. I tell myself I’ll buy on the next dip but the truth is I probably won’t. Investors either get Tesla, or they don’t. Maybe I just need to get over it.
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