If you have ever seen a novelty birthday cake candle that you cannot properly blow out without it suddenly reigniting, you have already got some idea of how Tesla (NASDAQ: TSLA) has been performing on the stock market in recent years.
Tesla stock has had big falls but also strong gains, moving around sometimes quite wildly. That analogy does not mean that, at some point, its value might not be extinguished altogether. That is always a risk for any listed company.
There is no shortage of investors who are bearish about Tesla stock, including some who have been for many years already. However, there are also quite a lot of investors who still see heaps to like about the electric vehicle (EV) company.
2026 has been tough for Tesla investors – so far
So how has Tesla stock performed lately? In short, not well. Since the beginning of 2026, its price has fallen by 26%.
So £10k invested at the start of the year has already been reduced in value to around £7,400. Ans Tesla does not pay a dividend, so an investor who bought in in January and has done nothing since is sitting on a painful paper loss.
By the way, I am excluding any impact of exchange rate movements in that number. But as Tesla stock trades in New York and is denominated in US dollars, that is also something to bear in mind.
Still, if I walked by a shop window and saw a sign saying ‘SALE! 25% off’ it would certainly catch my eye. So ought I to buy some Tesla stock for my portfolio?
An uncertain future, but with lots to build on
I do not think so (and do not plan to), because I think the share is overvalued. Tesla’s car business is quite attractive to me. It has strong sales, a large installed user base and helps the company to sell services. I see services as a key growth driver for coming years.
I also like the company’s power storage operation, as it can draw on Tesla’s battery expertise and proprietary technology.
But taken as a whole, Tesla’s business looks very expensive to me. Its stock costs over 300 times earnings. Even a 10th of that is more than I am usually willing to pay as an investor!
Clearly though, some investors see the valuation as more attractive than I do. So am I missing something? Perhaps. Tesla’s services division is booming and the company seeks to grow by commercialising self-driving taxis and robotics on top of its existing buiness.
Wait and see
If that works out brilliantly and profits soar, it could be that Tesla stock recovers the ground it has lost this year – and perhaps more.
But for now there is lots still to prove. Competition is tough in robotics. In self-driving taxis, Tesla looks far behind rivals such as Waymo.
The share looks as if it is priced for perfection, without offering me a sufficient margin of safety for the risks I think are involved.
Fortunately, other growth shares have caught my eye that I think do offer a much more attractive balance between risks and potential rewards.
Should you invest £5,000 in Tesla right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tesla made the list?
Christopher Ruane does not hold any positions in the companies mentioned.
