The Tesla share price is up over 100% in 2023. Too late to buy?

Have Tesla shares finally peaked?

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Key points

  • Electric vehicle and battery manufacturer Tesla has had a stunning year in 2023, with Tesla stock rising by more than 200%
  • However, Tesla shares are also down over the past 12 months, highlighting this stock's perennial volatility
  • Tesla shares could still be worth buying today, if the company can execute on its lofty goals

The Tesla Inc (NASDAQ: TSLA) share price has been a gift that kept on giving for investors in 2023 so far. Tesla stock started the year at just US$108.1 a share. But as of today, Tesla is sitting at US$224.57 a share. That's a year-to-date gain of 107.7%. 

The returns from the electric vehicle and battery manufacturer have been even better for Aussie investors who own Tesla shares, thanks to the falls that our own Australian dollar has experienced against the US dollar over the year so far.

Of course, it hasn't been all smooth sailing for long-term investors. Tesla, despite its size as the fifth largest stock on the US markets, tends to be one of the most volatile shares around. Sure, Tesla has had a stonking start to 2023. But over 2022, this same company gave investors a 65% loss, as you can see below:

The company also remains down around 6% over the past 12 months. Even so, the fact remains that Tesla stock has doubled its investors' money over the year so far. That begs the question: is it too late to buy Tesla shares?

Is it too late to get in on Tesla shares with a buy?

On the surface, the Tesla stock price looks expensive, which is what you might expect after a 100%-plus gain in just over five months. At present, Tesla shares have a price-to-earnings (P/E) ratio of 66.12. That certainly looks lofty against the stock prices of other auto manufacturers. For example, Toyota shares currently have a P/E ratio of just 11.28. Ford Motor Co is at 18.96, while its old rival General Motors is at just 5.6.

But Tesla has many things that its other rivals could only dream of. For one, it reportedly commands a 20% share of the European electric vehicle market. That figure rises to an astonishing 50% of the American market.

Tesla also has plenty of new ideas in the pipeline. As our Foolish colleagues over in the US recently discussed, CEO Elon Musk has just announced that Tesla will begin advertising for the first time ever. This comes ahead of the highly anticipated (and oft-delayed) launch of the Cybertuck later this year.

Musk has also stated that the rollout of autonomous driving will begin "maybe if not this year, I'd say no later than next year".

$2,000 a share?

As our Foolish colleagues across the Pacific also covered, one Tesla bull is ARK Invest's Cathy Wood. Wood has given Tesla a stock price target of US$2,000 by 2027. That would see investors nearly 10 times their money from here over the next four years. This rather optimistic share price target is built on the assumption that Tesla will be able to expand its autonomous driving facilities to enable 'robo-taxi' services. Wood believes Tesla could make a profit margin as high as 80% on these services.

That, in turn, could lead to Tesla becoming what could be described as a 'semiconductor stock'.

Of course, all of Wood's assumptions, well, assume a lot. Whether Tesla can keep or even grow its already dominant market share of electric vehicles, expand into autonomous driving and grow its profit margins even higher is the call that Tesla shareholders (and would-be investors) have to make today.

If it can, and Wood's projections are even remotely on the money, then its shares are a buy today, as Wood is arguing. But if it can't, then its shares might be too expensive. It's a big call.

 

Motley Fool contributor Sebastian Bowen has positions in Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended General Motors and has recommended the following options: long January 2025 $25 calls on General Motors. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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