Should You Buy Tesla Stock

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Should You Buy Tesla Stock

Should You Buy Tesla Stock Or Not?

There are only a few stocks that have polarized investors like Tesla (TSLA). A lot of people were pessimistic about Tesla, but it has proven all of them wrong over the years.

In the last 5 years, the Tesla share price has more than doubled. So, it's safe to say that Tesla has proven all of the naysayers wrong.

Tesla Faces Tough Competition In EVs Market

Now, the biggest question is: can Tesla stock still have enough gas in the tank to go higher? To answer it, we must look at Tesla's core business.

The core business of Tesla is EVs, and it is facing tough competition in this space. Also, the demand for EVs remains unclear in the long term.

The growth in multiple markets has slowed down. In fact, the belief that EVs will dominate the market is no longer a firm reality. This comes at a time when fuel prices are already at record high levels.

Amidst all of this, Chinese EV manufacturers have also flooded the market. This has made it difficult for Tesla to grow its sales volumes.

Also, the US tax credits have ended, which is now also eating into Tesla's bottom line. The net income last year was only $3.8 billion. Now, that's a sharp decline from last year's net income of $ 7.1 billion. billion.

One thing which Tesla has going on for itself is that it has diversified its business. It is now also a big player in the energy generation and storage business.

Looking ahead, bulls think the outlook for Tesla stock is very bright. They point to robotics (Optimus Robot) and self-driving cars as the future of Tesla.

But it remains to be seen whether the robots and the driverless taxis will really become a big thing. If it does, Tesla stock could easily double or even triple in the near future.

Considering all of these things, it doesn't make sense to own Tesla stock at the current valuation. Its P/E is more than 400 which just can't be justified. But, if Tesla stock prices drop to more reasonable levels, then a case for buying the stock can be made.

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