Investors who got in on Tesla (TSLA 0.09%) early have been handsomely rewarded, to put it lightly. A $1,000 investment in this electric vehicle (EV) and clean energy business 10 years ago would be worth an eye-popping $17,920 today. This translates to an unbelievable 1,690% return, turning this into one of the world's most valuable and influential companies.
It hasn't been a smooth ride, though, as the past several months indicate. As of April 11, this top EV stock is trading 47% below its record from December of last year, propelled by a huge loss in 2025.
Is Tesla a buy, sell, or hold in April?
Not behaving like a tech enterprise
Highly successful tech companies are known for their disruptive products and services and a culture of innovation. Monster growth is also usually part of the story. For much of its history, Tesla fit the bill. Its revenue and EV production volume shot up over the past decade as its models became popular among consumers interested in beautiful designs and cool tech features.
But Tesla is starting to resemble a typical auto manufacturer. And that's not a good thing.
For starters, it's more susceptible to competitive forces. Tesla's impressive success encouraged rivals to work on their own EVs. Nowadays, consumers face no shortage of choices.
Tesla also isn't immune to changing macro forces. It benefited greatly from a low-interest-rate environment for most of the 2010s. This is no longer the case. Higher borrowing costs and ongoing economic uncertainty can be discouraging for people who want to buy cars. As a result, Tesla has engaged in price wars to support demand.
This hurts financials. Growth has slowed, with automotive revenue down 6% in 2024. Profitability is taking a hit, with gross and operating margins contracting compared to 2023. Longtime Tesla bulls aren't used to seeing this.
NASDAQ: TSLA
Key Data Points
Uncertainty around the future
Tesla shares might be driving in the wrong direction. However, the valuation says something totally different. The stock still sells at a nosebleed price-to-earnings ratio of 123.5. While this multiple is down from a few years ago, it undoubtedly highlights the market's unwavering bullishness toward the business.
In other words, Tesla is a story stock. Narratives have a major impact. And CEO Elon Musk continues to emphasize the future of this business, one in which full self-driving (FSD) is the focal point of operations.
Musk has repeatedly overpromised and underdelivered on the timeline for FSD tech. To his and Tesla's credit, the company is set to launch a robotaxi service in Texas this June. That's a start.
The ultimate goal for Tesla is to introduce a global robotaxi service that can replace car ownership for many people, sees virtually unlimited demand, and generates a massive stream of high-margin revenue. Like Uber, in this vision, Tesla would have its own app or platform that connects riders with cars, but at a much lower cost and much more safely.
No one has any clue when or if this will happen. Notable challenges remain to achieve true FSD capabilities. Management will need to address regulatory developments, consumer trust, and technology advancements.
I can certainly understand why investors remain bullish, wanting to buy or hold shares. This continues to be a disruptive company, and shares trade well below their record.
My view is different. The stock is richly valued and prices in flawless execution in an uncertain future. Prospective investors should steer clear, and existing shareholders should sell.
