Investors know that even though Tesla (TSLA 1.88%) is trading sharply lower today compared to its all-time high last November, those who took a stake in the electric vehicle (EV) manufacturer's initial public offering (IPO) in 2010 would still be fabulously wealthy.
CEO Elon Musk has always been a somewhat controversial figure, but since his attempt to buy Twitter, he's now much more of a lightning rod for criticism. That's partly playing out in his company's stock performance, but also because taking out a $6 billion loan backed by Tesla shares to make the acquisition has that effect.
Image source: Tesla.
Still, Tesla is the biggest, most advanced EV manufacturer. It has a 75% share of the EV market, and industry site Cox Automotive said Tesla sold more luxury vehicles in the U.S. in the fourth quarter than Audi, BMW, Lexus, and Mercedes-Benz.
It delivered almost 1 million EVs in 2021, and in the first quarter of this year, delivered another 310,000, some 67% more than a year ago. That put the EV maker on the path to achieve Musk's goal of delivering 20 million Teslas by 2030.
A Tesla Model 3. Image source: Tesla.
Tesla owns the road
Tesla remains the most valuable auto stock on the market. At around $690 billion at the time of this writing, it is worth more than double as much as the next biggest carmaker, Toyota, which is worth $251 billion. It's also worth more than Ford, GM, Stellantis, and Honda combined!
For some, that just means Tesla stock is vastly overvalued, and brings to mind an analyst's critique last year that said Tesla wasn't worth more than $150 a share (it currently trades north of $700 a share).
But revenue growth is still accelerating. Furthermore, it has turned profitable and earnings growth rates are expanding as well.
TSLA Revenue (TTM) data by YCharts. TTM = trailing 12 months.
Even as Tesla confronts a growing number of competitors, its sales are ramping up. And it doesn't spend any money on advertising -- word of mouth has proved sufficient thus far.
A lot of that has to do with the introduction of the Model 3 and Model Y, the mass-market sedan and crossover EV, respectively. It has now begun shipping the Model Y from its Gigafactory in Texas, where it is incorporating its 4680 battery cell made in-house, which is likely to be an important development in light of the supply chain crisis still gripping the auto industry.
A Tesla Model Y. Image source: Tesla.
How high can you count?
Tesla went public on June 29, 2010, at a price of $17 per share, above its expected range of $14 to $16 per share, and last year exceeded $1,200 per share, which was after a 5-for-1 stock split in 2020 when shares were trading for over $2,200 each.
As noted, today the EV maker's stock is down to around $700 a share, which hurts if you got in near the top, but means you're still doing phenomenally well since the IPO. For those investors, we're talking about a near 13,800% increase in value, meaning a $10,000 investment 12 years ago would be worth $1.39 million today.
It's not likely Tesla will maintain that kind of growth. Not only is it seeing more competition from upstarts like Rivian and Lucid, which want to break into the market, but established automakers like Ford, GM, and Toyota are vying for a slice of the pie, too. Just about every manufacturer today has an EV on the road or in the works.
But there's good reason to believe that Tesla will maintain its industry dominance for years to come, and even with its CEO's manic personality, its stock should remain a great investment for just as long.
