The auto industry before might have seemed boring and slow-changing, but Tesla (TSLA 5.46%) has added excitement to the mix. It disrupted the market by bringing mass appeal to electric vehicles (EVs). And its success has resulted in a valuation of around $1.3 trillion.
Shareholders have captured huge returns along the way. If you invested $5,000 in this top EV stock five years ago, here's how much you'd have today.
Image source: Tesla.
Tesla shares have accelerated gains for investors
Tesla has been a monster winner. The stock has surged 186% higher in the past five years (as of Oct. 10), turning that $5,000 starting sum into $14,290 today. While the result is magnificent, it hasn't been a smooth ride. Tesla shares tend to be extremely volatile. They were down almost 50% at one point just this year, before recovering over the past six months.
Musk's grand vision continues to drive the narrative
Any reasonable analysis of the stock will surely conclude that the valuation isn't based on reality. Shares trade at a nosebleed price-to-earnings ratio of 250. The market continues to focus less on weak EV demand and profitability.
Instead, investors keep buying into founder and CEO Elon Musk's grand vision. The belief is that at some point in the not-too-distant future, the company will collect robust profits from robotaxis and humanoid robots, which makes the current valuation not matter much. Time will tell.
