Tesla (TSLA) has been one of the greatest success stories in the stock market for investors who bought the stock on its IPO and still hold today. The simple $10,000 investment on July 2, 2010 would be worth over $1,697,000 representing an astounding 51.19% annualized rate of return.
However, that is not the whole story, and the story is not over yet. For starters, if investors were honest with themselves, very few would have had the ability to hold Tesla since its IPO. Throughout much of its history the company lost money, and there was a period of time spanning more than 5 years where the stock price flatlined.
Long-term-oriented investors want to find it very difficult to exercise the patience to hold on. Nevertheless, there was a lot of hype surrounding the company that would have helped. Tesla did not really start making any money as measured by earnings and/or cash flows until 2019. Furthermore, positive operating growth since 2019 has been nothing short of extraordinary.
As a result, the stock price exploded just short of 2900% from July 2019 through November 2021. This meteoric price movement made legends of investors such as Kathy Woods and of course Elon Musk himself.
Arguably, that massive price advance could be justified based on the incredible growth the company was generating in earnings and cash flow. But even then, hype and hysteria drove the price beyond what prudence would dictate. Consequently, since November 5, 2021, Tesla’s stock price has been virtually cut in half. The culprit was excessive valuation because fundamentals continued to advance. In this video, I will explore Tesla’s storied past, but most importantly, focus on its future potential. The question is; does Tesla remain dangerously overvalued or has it become a true GARP (growth at a reasonable price) stock? Watch the FAST Graphs video and the viewer can decide for themselves.
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Disclosure: No position.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.
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