Up 68% year-to-date, and 180% over the past 12 months, it would be a struggle to find a better-performing stock than Tesla (NASDAQ: TSLA) in recent times. Tesla stock has risen 58% in the past month alone, and as a result, the firm now has a market capitalisation of over $1trn.
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.
