Tesla Closed Tuesday 3% Above Its 52-Week Low. Here's What Happened the Last 3 Times It Got This Close.

Tesla (NASDAQ: TSLA) closed at $307.44 on Tuesday, about 3% above its 52-week low of $297.82. The electric car maker's shares have had a rough stretch, including a roughly 15% single-day drop following the company's second-quarter report last week.

A stock scraping along the bottom of its yearly range tends to scare investors off. But Tesla has traded down to these depths before -- three times in the past eight years, in fact. And each time, the investors who bought while the news was ugly ended up looking smart.

So it's worth walking through what actually happened the last three times Tesla's stock fell this far, and what's different about the current episode.

Image source: Tesla.

Three lows, three rebounds

The first episode came in mid-2019. Tesla closed at a split-adjusted $11.93 on June 3 of that year, a multi-year low, as the company burned cash and skeptics questioned demand for its Model 3. Tesla was still losing money at the time. One year later, the stock had nearly quintupled, closing at $58.86 on June 3, 2020.

The second came in early 2023. After falling about 65% in 2022, Tesla closed at $108.10 on Jan. 3, 2023. Within days, the company cut prices across its lineup, and deliveries went on to hit records that year. Six months later, the stock had more than doubled to $279.82.

A year on from that January low, shares sat at $238.45, up about 120%.

The third came in April 2024. Tesla closed at $142.05 on April 22 that year, three weeks after reporting its first year-over-year decline in quarterly deliveries since 2020. To be fair, the recovery took longer this time. But it came. Twelve months later, shares had climbed about 68% to $237.97.

Notice what all three episodes have in common. Each time, the market's fear was about demand -- for the Model 3 in 2019, for electric vehicles in a shakier economy in 2023, and for an aging lineup in 2024. And each time, the company eventually produced a demand answer, whether through price cuts that filled its factories or the promise of cheaper models ahead.

Why this episode looks different

That history is arguably the strongest case for buying Tesla near $300. But the current setup breaks the pattern in two ways.

First, demand isn't the problem this time. Tesla delivered 480,126 vehicles last quarter, a second-quarter record, and revenue climbed 26% from a year earlier to $28.2 billion. That was an acceleration from the first quarter's 16% growth.

The scare is about profit. Operating income fell 57% year over year to $398 million, leaving an operating margin of just 1.4% (down from 4.1% a year earlier). Adjusted earnings per share declined 18% to $0.33. And with capital expenditures reaching $5.8 billion for the quarter (more than twice the year-ago level) as Tesla pours money into AI (artificial intelligence) computing, its robotaxi service, and its Optimus robot program, free cash flow went negative.

Second, the price of admission is different. When Tesla bottomed in January 2023, the stock traded near 30 times its prior-year earnings. In 2019, the company had no earnings at all, but its market value was a small fraction of today's.

Now, even sitting 3% above its 52-week low, Tesla trades at about 285 times earnings.

Put another way, the stock is near a price low, but it's nowhere near a valuation low. The earlier recoveries began when returning growth met a beaten-down multiple. Today's multiple isn't beaten down. It already assumes the spending currently crushing margins will pay off in a big way.

So, does history say Tesla stock is a buy at $307? Not quite. What history actually shows is that this stock has rewarded buyers when a demand scare met a reasonable price. Today's version offers neither. Demand is already strong, and the price still assumes years of success that hasn't arrived.

Of course, the pattern could go four for four. If operating profit inflects while the stock sits this low, the rebound could be dramatic, and it wouldn't be the first time Tesla made skeptics look silly.

But that's a bet on the spending paying off soon, not a bet on history repeating. Personally, I'll wait to see profits turn before buying this dip.

Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.