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Tesla (NASDAQ:TSLA) stock has long had a habit of surprising investors, and the past year’s been no different. Despite sluggish sales, plunging profits, adverse regulatory changes, and backlash against CEO Elon Musk’s politics, the Tesla share price has rocketed 108%.
This means anyone who invested five grand in the electric vehicle (EV) pioneer 12 months ago would now have over £10,000.
Over five years, the stock’s up more than 200%!
Mixed results
This week, we got Tesla’s Q3 results, and they were a bit mixed. Revenue beat Wall Street expectations, growing 12% year on year to a record $28.1bn. But earnings per share of $0.50 fell short of estimates for $0.55.
Sales were given a temporary boost as buyers in the US rushed to take advantage of the $7,500 EV tax credit before it expired. So there was pulled-forward demand.
Meanwhile, the bottom line’s hurting from declining automotive regulatory credits, which have long boosted profitability. These fell to $417m from $739m a year ago.
We already knew the delivery and production figures as these were released earlier this month. Tesla achieved a record 497,099 deliveries, but only made 447,450 cars. EV demand remains challenging in an increasingly crowded market.
However, the energy business continues to make progress, while Musk says its robotaxis will soon won’t require safety drivers in Austin, Texas. And he hopes Optimus humanoid bots will start going into production by the end of 2026.
Growth in Asia
It’s not all doom and gloom for Tesla’s EV business by any stretch of the imagination. In October, it launched the Model 3 and Model Y Standard in the US, starting at $36,990 and $39,990 respectively. This is an attempt to make its vehicles more affordable in the wake of the expiration of the EV subsidy.
Meanwhile, the company achieved record deliveries in South Korea, Taiwan, Japan and Singapore, as well as starting deliveries of the Model Y in India. Interestingly, South Korea’s now Tesla’s third largest market behind the US and China.
So while Musk’s politics has turned off some consumers in the West, those in the East don’t seem bothered by it all (the culture wars are seemingly more of an Anglosphere thing).
Should I buy Tesla stock?
Right now, Tesla’s in a transition period as it moves from an EV maker into an AI/robotics company. My fear is how long this will take, and whether it will ultimately pay off.
One worry I have is Tesla’s ageing vehicle line-up. The most recent model, the Cybertruck, hasn’t exactly set the world on fire. And there don’t seem to be any plans for newly designed models that might tempt EV buyers.
Admittedly, Tesla probably sees the cars as more like smartphones, where incremental software improvements are sufficient. And it’s even possible that Musk views consumer EVs as almost archaic when set against a shiny future full of robotaxis and humanoids.
However, for now and the foreseeable future, Tesla still makes most of its money selling cars. So I do see the lack of regular new models and rising competition as key risks.
With the stock currently trading at a lofty 172 times forward earnings, I don’t see any value. Perhaps that will change in 2026 if there’s a price correction.