Should You Buy Tesla Stock Below $450? Here's What You Need to Know

Alright, let's dive into the world of Tesla (TSLA) and figure out if buying its stock while it's trading under $450 is a smart move. We'll explore the company's recent performance, growth prospects, and potential risks to help you make an informed decision.

First things first, let's take a look at Tesla's stock price performance over the past year. Despite some volatility, the stock has managed to hold its ground and even make some gains. However, it's important to note that Tesla's stock price has not kept pace with the broader market or its peers in the tech and automotive sectors.

Now, let's talk about the factors driving Tesla's stock price and whether they're sustainable in the long term.

1. Innovation and Market Expansion: Tesla's continuous innovation in new markets like autonomous vehicles and humanoid robotics has excited investors. The planned Cybercab and Optimus projects are expected to represent vast opportunities over the next decade. However, investors should be cautious about how disconnected they let the future get from the present. The financial reality is that Tesla's vehicle business still generates virtually all of its revenue and profits.
2. Regulatory Support: CEO Elon Musk's alignment with the Trump administration is believed to help Tesla navigate the legal and regulatory landscape to launch its autonomous ride-hailing business. Since the Nov. 5 election, the stock price is up nearly 70%. However, the removal of U.S. electric vehicle (EV) tax credits raised concerns among analysts and investors, which could impact demand and, consequently, Tesla's financial performance.
3. Growth in Vehicle Production and Sales: Tesla has remarkable vehicle production and sales growth. In 2023, Tesla achieved record-breaking production and deliveries, surpassing 1.8 million vehicles. The Model Y became the best-selling vehicle globally, with over 1.2 million units delivered. However, Tesla's sales in the U.S. dropped by 34% in 2023 compared to 2022, partly due to the phase-out of federal EV tax credits.
4. Energy Storage Deployment and Growth: Tesla's energy storage business witnessed a significant 125% YoY growth in 2023, with deployments reaching 14.7 gigawatt-hours (GWh), more than double compared to the previous year. However, Tesla's sales in China grew by only 4% compared to 2022, despite the overall Chinese EV market growing by around 30%. This slower growth could be attributed to geopolitical tensions and increased competition in the Chinese market.



Given these factors, is Tesla's valuation justified? Tesla's stock currently trades at over 15 times sales, while Toyota, a leading automaker, trades at a price-to-sales multiple (P/S) of less than 1. This discrepancy is due to Tesla's rapid growth and the market's anticipation of its future potential. However, some analysts argue that Tesla's valuation may be too high, given the uncertainty surrounding its new products and the potential for a slowdown in its core automotive business.

In conclusion, while Tesla's valuation is higher than that of its peers, it is justified given its growth prospects and competitive advantages. However, investors should be mindful of the risks and uncertainties associated with the company's new products and the potential for a slowdown in its core automotive business. If you're considering buying Tesla stock while it's trading under $450, it's essential to do your own research and make an informed decision based on your risk tolerance and investment goals.