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Tesla (TSLA 0.24%) has been one of the best-performing stocks on the market over the last five years but also remains a battleground among investors. CEO Elon Musk has long been a lightning rod for controversy, most recently for his strong support of newly elected President Donald Trump, who has put him in charge of the new Department of Government Efficiency. Tesla stock has also soared since Trump was elected, up nearly 70% since then, making the company one of the largest in the world. According to this research from the Motley Fool, the company was the eighth-largest in the world as of Jan. 6.
Tesla’s intelligent religion is well known now. The corporate is one of the largest brands of electric cars (EV) in the world. Recently he exceeded through Byd of China, however, the two are still discussing the first place. However, Tesla is not only valued as a corporate electric vehicle. Investors have presented the course of action with the hope of their autonomous technology, which includes autonomous cars, such as Cybercab recently presented and its autonomous robot, Optimus. The calendar for sales products is not yet clear, but Tesla aims to start the production of Cybercab until 2026.
Shares of the EV maker are on a roll following Trump’s election, and it’s one of the biggest companies in the world, but is it a buy for 2025? Let’s take a look at the bull and bear case for the stock.
Tesla has necessarily introduced and showcased the EV market, and built an unmatched logo and ecosystem in the EV industry. It has built the world’s largest fast-charging network, and its logo tiers from mass-market cars like the Model 3 to luxury cars like the Model S, X, and Cybertruck, while rival BYD plays at the bottom of the EV market.
In addition to a strong logo and a global positioning, the autonomous generation of Tesla also provides a merit. Therefore, Alphabet Waymo is considered to , to any tesla. On the way potentially give me a merit in the autonomous race.
Finally, electric cars have only a low percentage in the overall market share of the automotive sector, and public policies around a giant component of the world, as well as environmental concerns, assist in converting the market market share into electric cars. This long-term Tesla announcement.
While Tesla has great long -term potential, there are reasons to participate on the company and action. First, the recent monetary effects of Tesla have been sad. The corporate ended 2024 with a decrease in vehicle sales, the first since 2011.
In the third quarter, overall cash was up 8% year-over-year due to sharp increases in its power and facilities businesses, however, automatic cash was up 2% to $20 billion. Tesla’s profit margins improved, outpacing an earlier decline in profits. However, the company will be tied to growing cash, as the auto industry has low gross margins.
Musk has said that the production volume would be developed by 20% -30% in 2025, however, Tesla has not followed through Musk’s objectives, and there are authentic questions about the call in the EV industry, since The expansion in the US has slowed down throughout the industry. That is a sign that the transition to EVs is possibly not as elegant as any hope, and can also worsen with Trump’s management in the workplace, since Trump is expected to get rid of the tax credits of EV and Take measures to help fossil fuels. companies.
Additionally, Tesla stock has gotten pricey after the recent rally. It trades at a price-to-earnings ratio of roughly 200 based on adjusted earnings, and its primary business is in a sector where most stocks trade at a P/E of less than 10. Tesla deserves a premium for its potential for disruption in autonomy and beyond, but a P/E of 200 for a company with nearly flat revenue growth currently is essentially unheard of.
The vision of Tesla’s autonomy can be unmatched, but significant execution still results in several years. Meanwhile, the name is incredibly expensive, even for a technology company, and investors of the expansion curve for the call for electric cars in which the counts are fractured. Trump’s management also seeks to challenge the industry.
At this point, the acquisition of the stock turns out to be a transparent bet on the company’s good fortune, but the assessment still leaves a long way to go if the corporate disappoints. From the risks involved, investors are older than avoiding action in 2025, at least to a dovish assessment or they look like lighter signs of progress in autonomy.
Suzanne Frey, director of Alphabet, is a member of the Motley Fool’s Board. Jeremy Bowman has no position in any of the mentioned movements. The Motley’s madness has positions and recommends Alphabet and Tesla. The Motley Fool recommends Byd Company. The Motley Fool has a dissemination policy.
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