Is it too late to buy Tesla shares?

| Last Updated June 6, 2022

electric vehicle being recharged

Tesla’s (NASDAQ:TSLA) share has been on a bullish run since the pandemic-driven market crash in March 2020. Moreover, the company market valuation recently hit $1trn when the share price crossed $1,000. While shareholders were undoubtedly overjoyed about this, prospective investors might now be wondering if it’s too late to buy Tesla shares?

Tesla’s progress towards dominance has been discussed previously. But can it continue to climb from here? Let’s explore.

The astounding growth of Tesla shares

Tesla is the only EV stock and automaker for that mater to cross the $1trn market cap. While investors are impressed over this remarkable surge in price, others are bewildered over this 1,000% increase in price since March 2020.

Tesla’s cars are high in demand. In fact, its demand exceeds its current production capacity. In the most recent third quarter, the company reported a 64% year-over-year increase in production, reaching 237,823 cars. Meanwhile, total deliveries also reached 241,300, representing a 73% year-on-year increase. This growth ultimately led to a 57% increase in revenue for the quarter.

In the recent deal with the car rental company, Hertz took the Tesla shares on a sky-ride. This $4bn deal, under which Tesla will be supplying 100,000 electric vehicles (EVs), is one of the biggest orders for the EV manufacturer. Indeed, this deal aligns nicely with the EV leader’s ambitions of leading the auto sector.

To buy or not to buy?

Tesla has benefitted a lot from being the first prominent electric vehicle manufacturer. But now, every automaker has joined the race. That means it’s no longer the sole recipient of the benefits from the EV boom. And competitors might start stealing market share from the company. Moreover, Tesla’s shares have taken a dip after hitting the peak of $1,222. It is currently trading around $932. This roughly 25% decline in share price has made me cautious about investing in the company.

Having said that, the firm is still managing to hold its ground so far despite the surge in new entrants. The automaker has set plans to sell one million vehicles in 2022. Moreover, we can always count on Elon Musk to stay ahead of the game. The EV boom in China seems to be on the verge of exploding. And the firm has already set up a factory in Shanghai to take advantage.

It is worth mentioning that Tesla has successfully launched its first Chinese-made EV in the market. Also, the EV leader has plans to build an entry-level EV model at its Shanghai factory, which will be priced under $30,000. At this pace, I believe, there are no roadblocks on the growth path for Tesla shares.

Investors who jumped in at the right time have benefitted more than they could have imagined from the accelerated growth in Tesla’s share price. But this does not mean that new investors have nothing to gain by investing today. I believe the growth of Tesla shares will undoubtedly slow down, but it will not stop. Hence I am considering this business for my portfolio today.

Final thoughts

The business continues to lead the way. In fact, in my opinion, electric car geniuses at Tesla will help the company maintain this position. Hence, it will continue to support the growth in Tesla shares and keep investors happy and content. But only time will tell whether I am right about this.

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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies, assets, and strategies mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.