Tesla (LLC: TSLA) stock has taken off like a rocket in 2023, soaring a staggering 55% year-to-date. Not many anticipated that at the end of a tricky 2022, which saw its share price fall by almost two-thirds. To those who did see it coming, congratulations.
Last year was rough for the entire technology sector, as a decade of super-loose monetary policy came to a swift end. Suddenly, all those fast-growing tech heroes found finance harder and costlier to come by, while inflation was ate into the real value of their projected profits.
Stellar performer
It didn’t help that the sector had become massively overvalued. At one point, Tesla was trading at a scarcely credible 1,000 times earnings.
Tesla wasn’t the only techie to crash last year, and it isn’t the only one to shoot up in 2023. Facebook owner Meta Platforms has shot up more than 80% year-to-date, while graphics and processor specialist Nvidia is up 100%.
I’ve missed out on the excitement, having spent recent months buying far more sedate stocks on London’s FTSE 100. The index is currently packed with dirt cheap, high-yielding blue-chips like asset managers, banks, housebuilders, insurers and miners. Yes, they’re boring by comparison, but should make me richer over the longer run, without Tesla’s craziness.
My ammunition is now almost used up. I’ve got around £1,000 left to invest. So is it time for me to change direction and throw some cash at Tesla?
It’s tempting. Analysts have written off Tesla founder Elon Musk so many times, but he keeps bouncing back. His controversial takeover of Twitter is today’s main concern as it sucks up time and money. Those exploding space rockets are a distraction too.
Musk is a supremely talented man, but he’s not infallible and still only has 24 hours in the day. On the other hand, does he need to spend time sweating the day-to-day stuff at Tesla? He takes the flak as a figurehead, but as he said himself, the company employs some clever people and he can mostly leave it to them while he roams elsewhere.
Tesla sold 1.4m cars last year, up 40% on 2021. Given that it produced 440,000 vehicles in the first quarter, up from 310,048 in Q1 last year, that figure should be trounced this year.
High-volatility share
Tesla’s future is exciting, with autonomous vehicle software, the Cybertruck and AI-enabled products still to come. The challenges are also huge, as every standard automotive company in the world desperately tries to play catch up.
Tesla is a stock like no other, given Musk’s profile and habit of making investors rich. Despite its extreme volatility, the share price is up a stunning 785% in just five years. What worries me is that performance is partly driven by sentiment, and that’s even more volatile. Today, it’s sky-high but I’m always scared of buying at the top of any hot run.
The wider tech sector is also flying but I suspect it’s overreached itself and is due a bit of retrenchment. So I don’t think I’ll chance my last £1,000 on Tesla today. I’ll look for a stock that’s fallen 60% this year, and maybe buy that instead. I’ll come back to Tesla when everybody hates it again.
