Tesla had a remarkable year in 2024, with shareholders enjoying a 70% gain as of December 30. The company’s solid sales volume and Donald Trump’s presidency contributed to its stock reaching new all-time highs. However, as the year ends, investors are wondering if they should buy Tesla stock for 2025.
Tesla has become the largest electric vehicle (EV) car manufacturer in the US, accounting for nearly 50% of EV sales. The company aims to dominate the automobile industry and is working on strategies to reduce costs and launch low-priced car models. Despite its ambitious goals, Tesla has made progress in recent quarters, with lower cost of goods sold per vehicle, increased deliveries, and improved gross margin.
Beyond EVs, Tesla has diversified into renewable energy, autonomous driving, and robotaxis, which could generate tens of billions of dollars in revenue. The company’s investments in artificial intelligence (AI) also hold promise, particularly for its humanoid robot Optimus.
However, there are concerns about the stock’s valuation, with a price-to-sales ratio of 16 and a forward price-to-earnings (P/E) ratio of 125. Conservative investors may question whether paying such a high price tag makes sense, especially considering the risks associated with high-risk ventures that have yet to materialize.
For existing investors who bought at lower price points, holding onto the stock into 2025 may be a good strategy. However, for new investors, buying Tesla’s stock at today’s valuation is probably too risky. It’s essential to weigh the potential benefits against the risks and consider being cautious before making any investment decisions.
Source: https://www.fool.com/investing/2024/12/31/is-tesla-stock-a-buy-in-2025