Tesla (NASDAQ: TSLA) saw incredible demand for its electric cars over the last decade, and that success translated into life-changing returns for shareholders who were fortunate to get in early. A $10,000 investment just a couple of weeks before Tesla launched the Model S in June 2012 would be worth $914,010 today. It would have been worth more than $2.2 million at the stock’s all-time high in October 2021.
Tesla has run into some roadblocks this year. Higher interest rates made financing a new car more expensive for customers. The company continues to look for ways to trim manufacturing costs, reduce prices, and sell more cars. Here’s why buying Tesla stock in 2024 could still deliver great returns.
The ultimate growth stock
Tesla’s market cap was less than $3 billion in 2012. Today, its market cap hovers around $550 billion, or 6.5 times the company’s trailing-12-month revenue.
Tesla posted a year-over-year decline in revenue in the first quarter as higher interest rates pressured demand, but the stock’s high valuation suggests it is not done growing by a long shot.
Investors are placing a high value on the shares due to Tesla’s record of robust growth, and the expectation there’s more to come. Over the last four years, the company’s revenue surged nearly fourfold to $96 billion. That increase was the result of reaching vehicle production of 1.8 million over the last year. However, that’s a small fraction of the 90-million-plus vehicles produced annually across the auto industry. Furthermore, Tesla’s opportunity is larger than the consumer auto market considering its interest in robotics and robotaxis.
But there are a lot of exciting things happening just within Tesla’s core electric vehicle business. It has ramped up production of its 4680 battery for the Cybertruck. Efforts to manufacture its own electric car batteries could significantly improve the company’s profitability while making its vehicles less expensive to produce and more affordable for consumers.
Tesla’s small share of the auto market coupled with management’s cost-reduction initiatives means investors can look forward to more growth.
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John Ballard has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
If You’d Invested $10,000 in Tesla Stock 12 Years Ago, Here’s How Much You’d Have Today was originally published by The Motley Fool
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