One of the most dramatic moves on the US markets in 2022 was the collapse of the Tesla Inc (NASDAQ: TSLA) share price.
Tesla shares started the year at US$352.26 each. But by the end of last month, the electric vehicle and battery manufacturer was down to just US$123.18 a share. That's a loss for Tesla stock of just over 65% for the year.
Ouch.
Tesla's 2022 performance was quite a change of pace for a company that has previously given investors mindblowing gains. Tesla was up more than 500% in 2020 and up another 50% or so in 2021.
So with a selldown of this magnitude, are we looking at the mother of all buy-the-dip opportunities? Or is Tesla just another falling knife right now?
Well, let's get into why the Tesla share price had such a rough year. It was undoubtedly partly due to rising interest rates in the US.
Just like Australia, the United States has seen a very sharp increase in interest rates over the past 12 months, as the US Federal Reserve moves to clamp down on inflation.
This has been especially painful for most growth companies, not just Tesla. Name any prominent tech stock listed in the US, and chances are it had a rough year in 2022.
Image source: Getty Images
Has Elon Musk's Twitter antics damaged the Tesla share price?
But not helping Tesla's cause was its CEO and flagbearer, Elon Musk. Musk has had, well, a very interesting 12 months, to put it lightly. Not only did he buy social media platform Twitter outright, but he has also raised many eyebrows with his new policies championing free speech at the company.
Many investors have worried that Musk's preoccupation with Twitter has seen him neglect Tesla, as well as potentially alienate its affluent customer base. This probably explains why the Tesla share price's most painful months were in the back half of 2022.
And yet I would argue that Tesla's brightest days are still in front of it. Despite the issues in its leadership team, the company still posted a 40% increase in vehicle deliveries in 2022 to 1.31 million, with production up 47% to 1.37 million.
That's breakneck growth for any company, but it is especially impressive for a capital-intensive vehicle manufacturer like Tesla.
Tesla is also preparing to launch its much-anticipated 'cybertruck' in 2023, which could give its numbers an even bigger boost in years to come.
Trucks (or utes as we call them here) are a segment of the market that Tesla doesn't currently address, so this could see its market share expand even further. Ditto with its rollout of the Tesla Semi which is currently underway.
So all in all, I think that the current Tesla stock price, now trading at its lowest level in almost three years (with a current price-to-earnings (P/E) ratio of 36.9), is a compelling buying opportunity considering the growth runway that remains in front of this company.
