While Elon Musk’s investment in Twitter has dominated headlines over the last few days, it’s worth noting that Tesla (NASDAQ:TSLA) stock has also climbed 30% in the last month. When you look at the progress made by the company, that doesn’t strike me as surprising.
Why is Tesla stock flying?
One reason for the recent acceleration in Tesla stock has been the opening of its new gigafactory in Berlin. Once fully up and running, this huge plant will deliver around 500,000 cars every year. That’s an ambitious target, for sure. However, based on the latest set of numbers released a few days ago, it definitely looks achievable.
Just over 310,000 cars were shipped in the first three months of 2022. As well as being a record for Tesla, that’s 68% more than that achieved from January to March in 2021. That’s impressive considering the supply chain headwinds faced by the $1.1trn company. Imagine what it might be able to do once normality returns.
Full financial results for the period are expected on 20 April. So is buying Tesla now a ‘no-brainer’ for a growth-focused Fool like me? Not quite.
Risks to consider
First, it’s hard to say for sure whether the dip in Tesla’s value from January to March was a mere blip. A resumption of the rotation into value stocks could easily put the share price into reverse. A rise in the cost of living could also dent sales and the awful events in Eastern Europe could realistically get even worse. Oh, and the pandemic is clearly still causing problems for the company, particularly in China.
It’s also apparent that Tesla can’t rest on its laurels. It may have a lead in the electric vehicle (EV) market but its nearest rivals rivals such as Volkswagen will be keen to steal market share, particularly in Europe. From a neutral’s perspective, the battle to become the established top dog will be fascinating to watch. From a shareholder’s perspective, perhaps not so relaxing.
Maverick or liability?
Another potential risk for me is also one of the company’s greatest assets, namely its CEO. There’s clearly a lot to admire about Musk. He’s a visionary, a maverick, a pioneer. He’s just the sort of person you’d expect to see at the forefront of a major technological revolution. As a potential shareholder, however, I can do without the cryptic announcements on social media, especially given the latter’s ability to move the share price down as well as up.
But what do I know? If I’d taken the risk of investing when everyone was doubting Musk and Tesla, my portfolio value would be worth a lot more than it is now. Kudos to anyone that did.
My verdict
As someone who’s willing to put his money to work over years rather than months, I can see the appeal of buying Tesla stock. The switch to EVs is still in its infancy, but also unstoppable.
For now however, I’m happy to be invested via Scottish Mortgage Investment Trust. This gives me exposure to the company while also offering a degree of downside protection through its holdings in other disruptive growth stocks.
That suits my risk tolerance, financial goals and time horizon — the only things that are truly under my control.