Evaluating TSLA Stock's Actual Performance

Tesla (NASDAQ: TSLA) stock has taken its investors on a wild ride over the last five years. Since November of 2021, shareholders have been treated to huge price jumps of more than 75%, and dizzying stock price drops of more than 50%.

But how has Tesla done for investors who bought in at other times? And how has that compared to the overall stock market? The answers may surprise you.

1 year or less: a mixed bag

Investors who bought Tesla shares a year ago in the wake of the 2024 presidential election -- in which Tesla CEO Elon Musk played a major role -- should be happy with their returns. The shares are up 25% from then to now, which beats the S&P 500's 14.5% total return over the same time period.

Image source: Tesla.

However, for much of the year, those investors were not only losing out to the broader market, but underwater on an absolute basis. Tesla's shares fell as much as 37% from their November 2024 prices in April 2025, as Musk's controversial political activities generated intense publicity that affected public perception of the company. They didn't return to market-beating status until September.

Tesla's all-time high closing price of $479.86 a share came on Dec. 17, 2024, just a few weeks shy of a year ago. If you'd bought Tesla stock on that day at that price, you'd be losing to the market by about 25 percentage points instead of leading it by nine. That's how wild Tesla's recent price swings have been.

3 & 5 years: almost identical

If you'd invested in Tesla three years ago, on Nov. 25, 2022, when the stock closed at $182.86/share, you'd be decisively beating the market right now, with a total return of 131% to the market's 75.5%. However, you would have had to weather a stomach-churning 40% drop in the share price before the end of 2022, and you would have spent most of 2024 losing to the market.

Surprisingly, if you'd bought shares of Tesla two years earlier, during the COVID-19 pandemic lockdown era on Nov. 25, 2020, your five-year performance would be almost identical to your three-year performance: 131% vs. 122%. That's because Tesla shares went way up in 2021, and way back down in 2022.

The big difference is that the market's returns are 21 percentage points better at the five-year mark, up almost 101%. So while Tesla stock is currently beating the market by about 21 percentage points over the five-year period, it's spent much more of the last three years losing to the market than the three-year position has.

The power of time

Obviously, beating the market -- especially such a robust bull market -- by any amount is a good thing, but the longer you hold an investment, the likelier it is to generate clear market-beating returns.

Case in point: The five-year returns on a Tesla investment are a very strong 122%, but the six-year returns are a jaw-dropping 1,790%, destroying the S&P 500's 137% return. Tesla's pre-2020 investors have never even come close to losing to the market at any time over the last five years, demonstrating the power of buying and holding.

John Bromels has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.