So, will the electric vehicle (EV) manufacturer recover? And should I be buying some shares today? Let’s take a look.

Tesla share price history

Before looking at whether I would buy Tesla stock today, let’s start by looking at the recent history of the share price. At the outbreak of the Covid-19 pandemic, Tesla was changing hands for around $70. Yet by the end of the year, the shares had accelerated, rising an astronomical 725%, to nearly $720.

While this performance was not reciprocated in 2021, the tail end of the year saw the Tesla share price peak to its all-time high due to an agreement struck with rental company Hertz. The price then dipped again, however, closing the year at $1,056.

Should I buy?

So, does this present a buying opportunity for me? Well, there are a few factors I must consider before buying Tesla.

The main stumbling block for me is its high valuation. Tesla share currently trade on a price-to-earnings (P/E) ratio of around 165. Considering a good value P/E is deemed to be around or under 10, this shows just how overvalued the business currently is. A market correction could lead to a drop in the Tesla share price.

As well as this, the global rise in interest rates is having an adverse impact on growth stocks. Higher interest rates mean people can receive greater returns on their savings — and therefore, they are less likely to invest. In times like these, growth stocks are hit the hardest. This means if interest rates remain at their current level, or even rise further, we could see a continuation in the Tesla share price fall.

However, we will undoubtedly see a rise in demand for EVs in the future as more people make the transition to electric. And Tesla is in a strong position to capitalise on this given its major market share. This is seen through the demand for Tesla vehicles, which doesn’t seem to be slowing down. As my colleague Dan Appleby highlighted, the firm increased its deliveries of vehicles in 2021 to 936,172, representing an increase of 87% over 2020. Further, revenue grew 71% year on year. And it’s expected to grow by over 50% in 2022. From this, it’s clear to see how investors could be excited about Tesla.

Overall, as impressive as the figures posted by Tesla are, I find it hard to ignore the challenges the business faces. I think rising interest rates and the current economic uncertainty could lead to investors pulling money from volatile stocks. And I think the Tesla share price could take a hit. While the business also enjoys a large market share in the EV space, I deem its current valuation a big risk. Therefore, I’m not convinced it can recover quickly and I won’t be buying Tesla stock for now.

The post The Tesla share price is down over 30% this year! Will it recover? appeared first on The Twelfth Magpie.

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• 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.

Tesla shares: up and down

The main reason for Tesla shares shooting up was the announcement by Hertz that it’s buying 100,000 Tesla cars to add to its rental fleet throughout 2022. The deal is reported to bring in a whopping $4.2bn for Tesla and is the largest ever purchase of electric vehicles, according to Bloomberg.

The share price was also helped by increasing European sales and increasingly bullish analyst estimates. In addition to this, the Model 3 sedan became the first fully electric vehicle in history to top new car sales in September in Europe.

Hertz has said that deliveries of the electric vehicles are already under way, which seems like great news for both companies. However, Musk then took to Twitter emphasising no contract had been signed and that vehicles would be sold for the same margin as to consumers. This pushed Tesla shares higher still, peaking at $1,229.

The shares have since fallen over 17%. A big reason for this is another tweet by Musk, where he informally asked his Twitter followers if he should sell his Tesla stock to satisfy tax obligations. The outcome was a near-$4bn sale of over 3.5mn shares. Tesla shares slumped 15% following the news.

Another spike?

It seems that Musk has the power to easily influence Tesla shares from his Twitter account. Therefore, in the immediate future, I don’t see why we couldn’t see another spike up above $1,000. However, this effect seems to work both ways, so we could see a drop of equal magnitude.

Longer term, it’s worth noting that Tesla released some excellent Q3 results in October. Automotive revenues were up 58% year-on-year, with EBITDA up 77% to £3.2bn. This is great news for shareholders, as is the fact that Tesla is now turning over comfortable profits after years of being a loss-making firm.

While this growth is great for Tesla shares, demand still far outweighs supply. In the case of Hertz, this means higher sales margins.However, more broadly, this could place a lid on Tesla’s growth. The global semiconductor shortage is still causing issues, and the pandemic is still hindering the industry’s recovery.

In addition to this, the electric vehicle market is heating up with much more competition. Although Tesla is a current industry leader, household automotive names like Ford and General Motors have set aside billions for EV R&D over the coming years.

Overall, I think that Tesla shares could easily jump back above 1,000p in the last few weeks of November. This is due to its past ups and downs plus its impressive growth. However, I won’t be adding this stock to my portfolio, as the price moves are too volatile for my liking.

The post Can Tesla shares climb back above $1,000 in November? 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?

Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has recommended Twitter. 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.

With divided opinions of where the Tesla share price is heading next, would now be a good time for me to add the electric vehicle (EV) manufacturer to my portfolio? Let’s take a look.

Hertz agreement

One of the major factors for the recent share price spike was a landmark agreement with rental company Hertz. In October, Hertz announced that it was expanding its fleet of EVs by initially placing an order of 100,000 Teslas by the end of 2022. Tesla stock jumped 12.6% last week as a result.

High demand for Tesla vehicles is no surprise, as seen by its Q3 results that were released late last month. The company saw record deliveries in the third quarter, with over 240,000 EVs delivered. The firm also produced 237,823 vehicles within the period, a 64% increase from the same period the year before.

The impressive results do not stop there. Q3 saw the firm achieve its best-ever net income, operating profit and gross profit. Earnings per share ($1.86) also beat expectations. For a potential investor like me, these are positive signs.

Should I buy?

With that said, I do have concerns about investing in Tesla stock. A major current issue is global supply chain issues. CEO Elon Musk said these issues have caused “insane difficulties” for the firm. This means demand could struggle to be met in the future, which could lead to a fall in share price.

Musk also tweeted that the firm has “far more demand than production”. And, he later stated that no contract had yet been signed between Tesla and Hertz. The fact Musk has had to come out and say this, and the current confusion surrounding the Hertz agreement, are off-putting factors for me.

Another issue is valuation, as my fellow Fool Edward Sheldon analysed recently. Already at a high valuation, my concerns are reinforced through the fact insiders have been selling their stock. Hundreds of millions worth of stock were sold by current and former board members as it hit the $1,000 mark. This more than likely suggests that they deem the stock overvalued right now.

So, while I have pointed out the positive with Tesla stock right now, there are too many issues for me to say I would buy the shares. The global supply chain issue could cause major problems, and any hint of further shortages could send the share price plummeting.

Valuation is also a major issue for me, and although the firm continues to churn out impressive results quarter-on-quarter, insiders selling stock is a red flag. I like Tesla, but just not right now. As such, I intend to keep it on my watchlist for the foreseeable future.

The post Should I be buying Tesla stock right now? 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 no position in any of the shares mentioned. 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.