Uncertainty in valuing Tesla stock due to innovation risks and high P/E ratio

From Nasdaq: 2024-07-27 10:03:00

Tesla stock has been on a wild ride, dropping to $140 in April, climbing past $260 in July, then dipping to $220 post-earnings. Pinning a value on Tesla is tricky due to innovation uncertainties like electric cars and self-driving tech. Uncertainty makes Tesla’s intrinsic value elusive, leading some to deem it “uninvestable.”

Investing in Tesla requires a significant “margin of safety,” meaning shares should trade below your fair value estimate. With Tesla’s unpredictable nature, a 50% discount may be necessary. Even if undervalued, Tesla’s stock appears expensive with a 63 P/E ratio, leaving little room for optimism in forecasts.

Investing in volatile Tesla stock requires a high risk tolerance and a long-term view. The Motley Fool’s Stock Advisor list excludes Tesla, suggesting other potential big winners. Past picks like Nvidia point to significant returns, but Tesla remains a risky play. Consider all factors before investing in Tesla.



Read more at Nasdaq: No One Really Knows What Tesla Stock Is Worth