This has been an excellent year to be an investor in Tesla (NASDAQ:TSLA) stock. Shares in the electric vehicle (EV) maker have just posted a record 12-day winning streak of consecutive gains and more than doubled in value this year to date.
So, how much would I have today if I’d invested $1,000 in the company at the beginning of January? And is the stock worth buying after its stunning rally?
Let’s explore.
A stellar performance
The growth in the Tesla share price over recent months has been a sight to behold. Last year, the company suffered its biggest ever annual decline. The shares crashed 65%.
Yet, in a dramatic turnaround, the stock has rocketed 135% since the start of the new year. It’s fair to say a few champagne corks popping at the firm’s Texas headquarters wouldn’t be unwarranted.
Tesla doesn’t pay dividends. Accordingly, the return for investors is calculated solely by measuring the company’s share price appreciation.
With $1,000 to invest at the start of the year, I could have bought 9.25 shares for $108.10 apiece. Many brokers allow UK investors to buy fractional shares in US companies, including Tesla.
At today’s share price of $254.16, my shareholding would be worth $2,350.98.
Supercharger deals
Tesla recently announced promising partnerships with Ford and General Motors regarding access to its EV charging infrastructure in North America.
Under the terms of the new deals, Tesla will allow rival vehicles to charge at over 12,000 Tesla Supercharger plugs. In addition, starting in 2025, the company’s charging technology will be integrated into Ford and GM EVs.
These agreements will provide Tesla with additional future revenues when Ford and GM drivers use the firm’s charging network.
But, perhaps more importantly, unified charging infrastructure paves the way for mass EV adoption across the pond — and Tesla’s technology is fast becoming the industry standard. Indeed, I wouldn’t be surprised if other automakers feel it’s necessary to strike similar deals with Tesla in the future.
Wedbush Securities has raised its price target for Tesla stock to $300, predicting that the agreements could generate an additional $3bn in revenue for the company over the coming year.
Is Tesla stock expensive?
After its remarkable rally, the stock isn’t cheap. The company’s price-to-earnings ratio currently stands at 71.9, which is considerably higher than the S&P 500‘s 21.5 times multiple.
There’s a risk that investors could be chasing gains if they enter a position today. Some analysts have branded Tesla the most overbought stock on Wall Street.
It’s worth noting that longstanding Tesla fan Cathie Wood, the CEO of ARK Investment Management, has decided it’s a good time to take profits. Wood’s funds recently sold 393,000 Tesla shares for an estimated $98m.
Should I buy?
Tesla’s long-term future looks bright to me. The company is successfully cementing its position as the trailblazer in the EV sector with its new partnerships. Plus, the market opportunity is enormous in light of a global push to achieve net zero.
However, I wouldn’t be surprised to see a pullback in the Tesla share price after an impressive run. The stock will stay on my watchlist for now, but I’m ready to buy if any share price dips occur over the coming months.
