Tesla Is a Great Long-Term Bet at Current Multiples

  • Tesla's (NASDAQ:TSLA) most productive plant in Shanghai was shut and is now operating at reduced capacity because of Chinese regulations surrounding Covid.
  • Some investors worry that Elon Musk might have less time to dedicate to Tesla following the potential deal to take over Twitter. It is a cause for concern.
  • TSLA has reached new lows and is a buy-and-hold investment. If you're experienced with risk management and want to maximize your return, these shares could provide some decent money.
TSLA stock - Tesla Is a Great Long-Term Bet at Current Multiples

Source: Zigres / Shutterstock.com

A recent Bloomberg Intelligence report suggests Tesla (NASDAQ:TSLA) will lose its position as the biggest electric car maker by 2024. The crown instead will go to German automaker Volkswagen (OTCMKTS:VWAGY). The Bloomberg study says Tesla will reach its production cap in 2024. It also thinks the German giant, Volkswagen, will surpass it. However, it’s important to remember the positives of TSLA stock before you decide to abandon ship or not.

Tesla has done many things recently to innovate the automobile industry. In addition to its electric cars, it has introduced several other products such as solar panels, batteries, and more.

Tesla has been on top of the industry for years, improving its product and customer service. It’s also made big progress in building its brand while providing great innovation advancements.

Elon Musk founded Tesla in 2003, and it’s since become one of the most well-known companies in the world. With its innovative approach to electric cars, unique brand image, and success in the complicated world of financial markets, Tesla is set to change how we all travel.

Part of the blame has to do with the general macroeconomic environment. For a long time, inflation concerns have weighed heavily on the economy. Inflation fears led to expectations of further Fed rate hikes, which made treasury yields and growth stocks fall under pressure.

On the company front, there are also several issues to tackle. In China, the administration continues to maintain a zero-Covid strategy. As a result, the company’s most productive plant in Shanghai has stopped production and is operating at reduced capacity.

Plus, shareholders are unhappy with Musk’s $44 billion acquisition of Twitter (NYSE:TWTR). Automakers like Tesla are having difficulty tracking the rising costs of raw materials that go into batteries but also have to reckon with the shortage of chip makers caused by Covid’s Shanghai-based supplier restrictions.

Ticker Company Current Price
TSLA Tesla, Inc. $737.12

Treat TSLA Stock As a Long-Term Investment

The company has seen a lot of recent falls in its share price. Upsetting fundamentals like the lack of support from key investors are impacting the stock.

What a difference a year can make, though. In 2021, it seemed Tesla was unstoppable. Cathie Wood received praises for her aggressive attitude in building its position in Tesla stock. However, the Russian invasion of Ukraine, inflation fears, and supply chain issues have hammered the broader markets. And Tesla is no different.

In addition, what hasn’t helped matters is the Twitter investment. If the deal goes ahead, it will greatly impact the investing world. But Tesla investors will be concerned that Musk is looking elsewhere when all eyes should be on Tesla’s operations.

Investors of Tesla may be concerned after seeing the controversies happen with specific platforms in the past. Tesla is trying to ensure that this doesn’t become a distraction when dealing with shareholders. The acquisition would culminate with Musk having billion-dollar companies, Tesla, Twitter and SpaceX under his leadership. He owns two smaller ventures: The Boring Company and Neuralink.

Tesla lost much time and energy due to the Covid shutdowns in Shanghai. Despite this, it still managed to increase their revenue by 87% over the same period last year. That deserves some credit.

Buy It and Forget it

Use this time to think about your decision and the company you’re considering investing in. What are its prospects for the future? Is it growing and finding success? Consider this entire process and decide whether or not it’s a good idea for you.

Tesla, a stock with a tendency to be riskier than most, has seen its share price jump more than 10,000% in the last 10 years. This is largely due to Musk’s vision for the company and his work creating sustainable transport.

Musk has managed to grow Tesla into the world’s largest car company. On top of this, betting against Musk is becoming less attractive because it is growing more and more powerful now.

Tesla’s projected future value is largely dependent on Musk’s continued involvement. He is the company; ultimately, this could be a huge key-man risk for investors. However, some companies have seen key personnel depart in recent years. Although some companies might have to go through a period of adjustment and heavy losses, they will be able to survive and bounce back in the long run.

Therefore, TSLA stock has become a buy-and-hold investment for risk-tolerant investors. In the last few months, share prices have dropped significantly. If you happen to be an investor and experienced with risk management, these shares could provide some decent money.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


Article printed from InvestorPlace Media, https://investorplace.com/2022/06/tsla-stock-is-a-great-long-term-bet-at-current-multiples/.

©2022 InvestorPlace Media, LLC