The US-listed electric battery and vehicle manufacturer Tesla Inc (NASDAQ: TSLA) remains one of the most controversial stocks on the US markets.
After a blistering run up over 2020 and 2021, Tesla shares had a shocker last year. The company started 2022 at US$352.26 a share, but ended the year down a nasty 65% at US$123.18:
So investors have taken one mightily cold bath on this one.
But for fans of Tesla, perhaps these lower prices are drawing some eyes. So could this be the moment to jump into this future-facing company?
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Elon Musk…
Well, the first thing to note is that it's very possible that Tesla's woeful performance last year wasn't entirely the fault of the company's performance itself. Tesla CEO Elon Musk is a highly controversial character. Musk has been an eyebrow-raiser for years. But his antics in 2022 were certainly divisive.
Most pressingly, many investors began to worry that Musk's quest to purchase the social media giant Twitter compromised Tesla.
Not only is Musk now running Twitter in addition to Tesla and his other companies like SpaceX, but he has sold down significant chunks of his Tesla holdings to fund the US$44 billion purchase.
If you don't like Musk, his antics or his… unique way of running his companies, then perhaps Tesla is not an investment for you. Musk remains Tesla's largest single shareholder, and it's likely that he will remain at the helm of the company for as long as he wants to.
So everyone knows that Tesla is a leading provider of fully electric vehicles. Many countries, such as the United Kingdom, have already passed laws that will outlaw the sale of internal combustion-powered vehicles over the next two decades.
And there is significant pressure around the world to move vehicle fleets to electric power in order to combat climate change. This is a powerful tailwind behind Tesla.
The company is also expanding its vehicle range to cater for more customers. Its most popular models are the mass-marketed Model 3 and Model Y. But the company is working on bringing out its 'cybertruck' ute. It has also recently begun rolling out the Tesla Semi.
So I think there is plenty of growth left in Tesla's future.
But let's get down to some numbers now.
Is Tesla stock a buy or a sell today?
Elon Musk stated that he has set a goal for Tesla increasing its vehicle deliveries by 50% in 2022. The company did not quite achieve that, announcing recently that total deliveries grew by 40% in 2022 to 1.31 million.
Still, I consider that to be a very impressive figure, especially for such a capital-intensive business.
At the current Tesla stock price, the company has a price-to-earnings (P/E) ratio of 37.71. For a company that just grew its sales by 40%, I personally think that P/E ratio is quite reasonable.
If I was thinking about buying Tesla stock today, considering these metrics, the final question I would ask myself is this: 'Is this company going to be larger and more profitable in 10 years' time than it is today?'. If the answer to that question is yes, then the current pricing might be your best chance to buy Tesla shares.
