In 1 year, £5,000 invested in Tesla Stock could be worth…
The last couple of months have been quite tumultuous for Tesla (NASDAQ:TSLA) shareholders. The US electric vehicle (EV) manufacturer has seen its valuation tumble by over 40% since its peak in December. This downward trajectory’s seemingly started to accelerate since the start of February, falling by 30% so far.
Whatâs going on? And is this secretly a buying opportunity for long-term investors?
Falling short of expectations
Itâs no secret that Teslaâs stock trades at a premium valuation. Even today, after almost half of its market-cap has been wiped out, the forward price-to-earnings ratio still sits at a whopping 96! As such, seeing such extreme volatility at these levels shouldnât be surprising. But what triggered this recent sell-off?
There are a lot of influencing factors, making it difficult to pinpoint the main catalyst. However, the general consensus seems to be, as usual, surrounding Elon Musk, who’s become even more controversial.
There was hope that a closer relationship with President Trump could prove advantageous for the company, but that doesnât appear to have materialised. Furthermore, Muskâs involvement with the newly-formed Department of Government Efficiency (DOGE), as well as meddling in German politics, is seemingly turning off some potential customers.
The latest European car registration data for January was particularly concerning, given it showed a 45% reduction in Tesla registrations for the month. Thatâs despite a 37% increase in overall EV registrations over the same period. Meanwhile, in its home market, protests have started to break out in front of Tesla showrooms due to Muskâs activities within DOGE.
Where could the stock go from here?
The recent reputational damage surrounding Tesla’s understandably spooking some investors. However, while the short-term appears murky, the long-term trajectory of this business may still hold some promise. Investments in artificial intelligence (AI) and robotaxis pave the way to new market opportunities. And the firmâs industry-leading battery technology continues to give Tesla a significant advantage over its peers both in terms of lower costs and longer vehicle range.
With that in mind, itâs not too shocking to see a large number of institutional analysts shift their recommendations to Buy in light of the recent stock price turbulence. And overall, the average 12-month share price target now sits at $345.76 per share. Thatâs the equivalent of a 21.5% potential gain, transforming a £5,000 investment into around £6,075 by this time next year.
Of course, share price forecasts arenât guaranteed. And with new trade wars brewing due to rising US tariffs, Tesla could endure further turbulence ahead. Personally, with so much uncertainty surrounding the brand today, this isnât a stock Iâm tempted to add to my portfolio right now.
However, I may have to reconsider my opinion should the share price fall further.
The post In 1 year, £5,000 invested in Tesla Stock could be worth⦠appeared first on The Motley Fool UK.
Like buying £1 for 31p
This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
More reading
- Down 45%, could Tesla stock completely crumble?
- £10,000 invested in Tesla stock after inauguration day is now worthâ¦
- Here’s why Tesla stock nosedived 27% in February
- Down 41% in months, is Tesla stock overvalued or undervalued?
- Buy Tesla? I still prefer this FTSE 100 growth stock
Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.
