Stock market

Down 46% From 2023 High, Is This My Best Chance to Buy Tesla Stock?

During 2023-24, stock market pundits became obsessed with the Magnificent Seven, or Mag7, mega-cap tech stocks. These giant corporations have driven most of the growth. S&P 500 The index is lower since October 2022. However, I will discuss it. Tesla (NASDAQ: TSLA ) is no longer eligible as a Mag7 member.

Tesla takes a tumble

On Friday, April 5th, I noticed that Tesla’s share price had fallen, making it one of the worst performers in the S&P 500 for the day. As I write, the stock stands at $162.05, down 5.3% since Thursday’s close.

Moreover, valuations for Elon Musk’s prized asset have shown continued weakness of late. It is down 8% in five days and 10.3% in one month. Worse, it has crashed 37.7% in six months and is down 12.7% in value in a year.

That said, Tesla’s stock has risen 784 percent over the past five years, making some of its most ardent supporters millionaires. But the majority of investors who have jumped on board since November 2020 will be taking heavy losses, at least on paper.

At its all-time high, shares hit an incredible $414.50 on November 4, 2021. Over and over again in 2020-21, I warned that Tesla stock was in a bubble that was sure to burst. With a price-to-earnings ratio in the hundreds and no historical profitability, Tesla was held back by hope and hype.

Since its all-time high, shares have crashed 60.9%, losing more than three-fifths of their value in 29 months. They are also 45.9% below their 2023 high of $299.29, reached on July 19 last year. Ouch

Time to buy a Tesla?

If it was any other bargain business, I could take his shares without any hesitation. But Tesla is no ordinary company and Musk is no ordinary corporate leader. In fact, his often outlandish public antics and personal behavior kept me from buying Tesla stock for years.

Despite my dislike of Elon’s personality and management style, I’m seriously considering buying Tesla stock in the 2024-25 tax year that begins today (Saturday, April 6). Still, I know that buying into this $500bn+ business will be a rollercoaster ride, because it’s a Really Volatile stock.

Also, with a price-to-earnings ratio of around 40, Tesla’s earnings yield is just 2.5% annually. I can easily find cheap UK stocks with earnings yields of 15%+, but my wife and I already own many Footsie Value shares.

Tesla’s latest woes

Then, in its latest quarterly report, Tesla delivered less than 387,000 electric cars. This was the lowest quarterly figure since 2022 and was down 8% year-on-year. Analysts also warn that the group may have to cut sticker prices to keep up with rising Chinese rivals.

Also, deliveries were 20 percent lower than in the last quarter of 2023. This led one Tesla critic to warn that the firm ‘could go bust’, and its stock fell to just $14. Then again hedge fund manager Per Lekander is betting against Tesla shares from 2020 – a bold move.

Finally, I sincerely hope Musk doesn’t run Tesla into the ground, like he did with the social media group X, previously on Twitter. Despite my misgivings and gritting my teeth, I have added this auto/tech stock to my portfolio watchlist for 2024-25!

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