The Tesla (NASDAQ: TSLA) share price has had a dire 2022. Down 40% year-to-date, investor confidence surrounding the electric vehicle manufacturer has been squeezed by growing macroeconomic concerns.

However, yesterday offered a glimmer of hope as the stock rose 9%. So, is this the start of the road to recovery? And should I be buying Tesla shares today? Let’s find out.

The Tesla share price in 2022

Tesla’s trajectory over the past five years has been extraordinary. The stock has returned 845% within this period. So it’s a top performers over this timeframe. However, this year has seen a reversal of this impressive growth. One of the main reasons for this is rising inflation. Spiking rates dampen confidence in future company earnings. And with interest rates also jumping this year, these combined factors have driven the Tesla share price down.

However, yesterday saw that small revival in the stock’s price as CEO Elon Musk expanded on a statement he’d made earlier this month about cutting Tesla’s workforce. The firm had been expected to lay off 10% of its salaried employees. And while this will still be the case, Musk said yesterday that Tesla will continue to hire hourly workers. As a result, the layoffs will now add up to just 3.5% of the workforce. With investors clearly happy about this news, the stock jumped.

Other factors

While the above is clearly good news, I still have some concerns.

First, the major issue I have with Tesla is its high valuation. With a current price-to-earnings (P/E) ratio of 98, I think Tesla is overvalued. For comparison, rival General Motors has a P/E of just 5.44. And this puts me off when I think about adding Tesla shares to my portfolio.

Another issue I have is competition. Although Tesla is an established manufacturer, as rival firms make the inevitable transition into the EV space, it may struggle to hold on to its market-leading position. This threat can already be seen with Ford, which recently made a pledge to be all-electric by 2030.

However, Tesla is still in a strong position. Despite supply chain issues, the firm managed to produce over 305,000 vehicles and deliver 310,000 of them in Q1. On top of this, revenues also increased 87% year-on-year for the period. Given the tough conditions Tesla has faced, these results show the strength of the business.

What also excites me is the opening of its gigafactory in Berlin. This move will allow the company to expand into Europe, with the factory able to produce 500,000 vehicles every year. Should the firm keep up this strong growth, I’d expect this to lead to a rise in the Tesla share price.

Should I buy?

Tesla’s growth has been impressive. And the announcement by Musk yesterday could be the start of the stock’s revival. However, I won’t be buying Tesla shares today. The firm faces too many challenges for me. And with competition set to heat up, I’m going to hold off buying for the time being.

The post The Tesla share price rose 9% yesterday! Should I buy? appeared first on The Twelfth Magpie.

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Charlie Keough 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.

So, will we continue to see Tesla shares rising in the months ahead? And should I be adding the electric vehicle (EV) manufacturer to my portfolio? Let’s find out.

Tesla shares rise

There are a few reasons why the stock has seen a recent jump. One of these is the opening of Tesla’s first European gigafactory. Opened in late March in Germany, the long-awaited factory will help support the firm’s expansion into Europe. It’s expected to produce 500,000 vehicles and millions of battery cells every year.

In line with this, in early April Tesla released its latest set of delivery results. For Q1, Tesla delivered 310,048 vehicles. This represents a major jump from the 184,800 delivered in the same period last year. This is all the more impressive, considering the supply chain issues it has been facing. Based on these numbers, its clear to see why Tesla shares have jumped.

Tesla concerns

Yet, despite these impressive figures, I do have a few concerns with Tesla.

The first of these is its high valuation. Tesla’s current price-to-earnings (P/E) ratio is an extortionate 215. There is no doubting this places Tesla as seriously overvalued. For comparison, General Motors has a P/E of just 5.78.

On top of this, the firm also faces a variety of problems in the near future. Despite the impressive delivery results, Tesla is set to continue to face supply chain issues in the months ahead. And as the cost of living continues to rise, this may impact future sales as people shy away from making purchases. In the current economic conditions, people also deter away from growth stocks, in part due to their volatility. Should investors begin to offload Tesla shares, the price will take a hit.

Further, while there is no doubting that Tesla always has one eye on the future, so does its competition. Many established manufacturers have been venturing into the EV space as the transition to electric seems to be inevitable. For example, Ford recently pledged to be all-electric by 2030. And it’s beginning to take strides towards this through the $1bn transformation of its Berlin site. Should these firms be successful in their moves, Tesla may not enjoy the large market share it currently has in times ahead.

Will the rise continue?

Despite the strong Q1 numbers, I’m not too sure Tesla shares will be able to keep up the impressive performance. The business will potentially face massive headwinds in the month ahead. And its high valuation steers me away from the stock. Because of this, I won’t be buying Tesla shares today.

The post Tesla shares are rising! Will this continue? appeared first on The Twelfth Magpie.

More reading

• I missed out on Tesla stock. So should I buy SpaceX?
• How much impact could a SpaceX merger have on the Tesla share price?

Charlie Keough 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.