Tesla has been a top performer in the market, with its shares more than doubling the S&P 500’s gains over the past five years. However, investors should be cautious about buying the stock now due to several reasons.
Firstly, Tesla’s shares are expensive, with a price-to-earnings ratio of 179, compared to the average P/E multiple of 24.7 for the S&P 500 index. This makes the stock pricey, despite Elon Musk’s claim that it will always be an excellent investment over the years.
Additionally, Tesla’s business seems to be in a slump, with automotive revenue down 21% and GAAP earnings per share tumbling 70% to $0.12 in the first quarter. While the company has made progress on its automation and robotics initiatives, such as launching its robotaxi service and aiming to produce 5,000 Optimus robots this year, these markets are still unproven.
Moreover, Musk’s increasing distractions from other ventures, including his new political party plans, may impact Tesla’s growth. As the company needs a leader who can devote attention to it, investors should be wary of buying stock now.
While Tesla could still be a good investment in the future, it’s best to exercise caution until Musk proves he’s fully committed to the company or another leadership changes. For existing shareholders, holding onto their shares might be a more suitable option for now.
Source: https://www.fool.com/investing/2025/07/18/should-you-buy-tesla-stock-while-its-below-330