I am a believer in long-term investing. Over the long term, Tesla (NASDAQ: TSLA) has been an incredible performer. Tesla stock is up by 35% over five years, but it is up by a phenomenal 24,029% in the 16 years since it listed on the NASDAQ stock market.

This year, so far, it has not done anything like as well.

In fact, the stock has fallen 31% since the turn of 2026.

Given its long-term value creation record, could this be an opportunity to buy the growth share for my portfolio?

Focussed on the future, not the past

While a company’s track record can be helpful when assessing its prospects, it is a mistake to look at a current share price and see it as a bargain just because it is cheaper than a past price.

After all, times change – and I think Tesla demonstrates this pretty well.

It was once seen as the innovator in the electric vehicle market. It also had a desirable, powerful brand.

Over recent years, Tesla’s brand appeal has faded, for reasons varying from consumer fatigue to the company’s boss’s political involvement.

But more importantly,  in my view, the electric car market has changed around Tesla. The innovators now are Chinese rivals like BYD and a host of smaller automakers.

That level of competition has not just made it harder for Tesla to grow sales. It has also led to more pricing pressure. That has already hurt profit margins — and I see that as an ongoing threat.

Meanwhile, subsidies have declined. That has been especially painful for the company in the key US market, where they were once a key part of Tesla’s earnings.

Where does Tesla go from here?

Such pressures help explain why Tesla stock has shed nearly a third of its value so far this year. They are also becoming more evident in the company’s financial performance.

The carmaker’s second-quarter trading update released this month illustrated some of the challenges.

Take profitability as an example. On one hand, Tesla’s sales were strong – automotive revenues grew by 23% year on year.

Despite that growth, net income attributable to common stockholders (prepared using Generally Accepted Accounting Principles) actually declined.

That decline was only 5%, but if revenues grow almost a quarter yet profits fall, profitability is clearly being squeezed.  

Even more alarming in my view, the free cash flow of the second quarter last year gave way to over $1bn of negative free cash flow this time around. In other words, more money was going out of the door than came through it.

I don’t see value here!

Tesla has confounded its critics many times before and could do so again.

Although it is operating in a challenging market, it has sizeable economies of scale and a large installed user base. Services and other revenue is soaring – it leapt 50% year on year.

But this is a business that clearly faces big challenges – yet sells at a price I do not think reflects them.

At 287 times earnings, Tesla stock looks badly overpriced to me, not a bargain.

I have no plans to add it to my portfolio.

Should you invest £5,000 in Tesla right now?

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Christopher Ruane does not hold any positions in the companies mentioned.