Tesla has lagged the market over the past year.
The company has attractive growth opportunities.
But Tesla also faces significant risk.
Tesla (NASDAQ: TSLA) has been a pioneer in the electric vehicle (EV) market and has helped push mass adoption of the technology. The company has been handsomely rewarded for its efforts, with its shares outperforming the broader market since going public in 2010. However, recent years have been more challenging for Tesla, as the company has faced several headwinds in its core EV market. With that said, read on to find out how much a $1,000 investment in Tesla a year ago would be worth today.
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Tesla's shares have gained about 4.53% (as of writing) over the past 12 months. That means it would have turned an initial $1,000 investment into about $1,045. Those aren't negative returns, at least, but they are lower than those of major U.S. market indexes over the same period. For instance, the S&P 500 has climbed 17.59%, good enough to turn $1,000 into almost $1,176.
Can Tesla get back to its market-beating ways moving forward? There are some reasons to think so. Despite struggles within its EV business, the company is ramping up other opportunities, especially its robotaxi service. Tesla launched robotaxis in Austin last year and has since expanded them to other cities.
Further, even though it initially used its Model Y running on its Full Self-Driving software for this business, it recently launched the Cybercab, a dedicated, autonomous two-seater that could become the backbone of its robotaxi fleet. The Cybercab is likely cheaper to manufacture than the Model Y, so it could help Tesla keep costs down as it scales its robotaxi service. And if it gains traction, the company could see revenue and earnings improve.
However, Tesla is spending significant sums to pursue this and other projects, and it still trails Waymo, a leader in the self-driving industry backed by the cash-rich Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Then there is valuation. Tesla is trading at 153.6x forward earnings, which assumes excellent execution. Tesla may perform well over the long run, but the stock remains risky and likely to be volatile going forward. Keep that in mind before initiating a position.
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Prosper Junior Bakiny has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.