This got my attention. Currently, Tesla has a market capitalisation of about $716bn. However, Apple and Saudi Aramco have a combined market-cap of around $4.6trn. If Elon Musk is right, Tesla stock could be a huge winner from here.

Should I buy the growth stock on the back of this bold call from the ambitious CEO? Let’s discuss.

Tesla stock has huge potential

In the long run, I do think Tesla has the potential to get much bigger. This isn’t just a car company. Instead, it’s a car company, a battery company, a solar panel company, an artificial intelligence company, and much more.

I’ve said before that what really excites me about Tesla is its autonomous driving technology. I see a lot of potential here. If the company can crack full ‘Level 5’ self-driving technology, it could launch a ‘robotaxi’ service and ultimately change the way we get around forever.

It’s worth noting that this robotaxi concept is a major part of Cathie Wood’s investment thesis for Tesla. In a research report published last year, the high-profile fund manager put a 2026 share price target of $1,533 ($4,600 before the recent stock split) on the stock on the back of the robotaxi potential. At the time, her view was that there was a 50% chance that Tesla will achieve fully autonomous driving within five years.

Given the growth potential here, I wouldn’t rule out the possibility of Tesla becoming bigger than Apple and Saudi Aramco combined at some stage. I think it’s certainly possible.

Downside risk in the short term?

Having said that, I think there’s a chance Tesla stock could keep falling before it climbs meaningfully higher. In the short term, the company is facing a number of challenges.

For example, right now Tesla is facing major supply chain and logistical issues. This is illustrated by the fact that last quarter it produced 365,923 electric vehicles, but only managed to deliver 343,830 of them. This delivery figure was below analysts’ estimates.

It’s also facing intense competition. This is forcing the company to slash its car prices. In China, it recently cut its starting price for Model 3 and Model Y by up to 9%.

Meanwhile, deteriorating economic conditions could also be an issue for Tesla. In a recession, people tend to hold off on making large purchases.

As for the valuation, it remains quite high. Currently, the forward-looking P/E ratio here is around 56. At that valuation, I think there’s downside risk in the short term. And I’m not the only one who is concerned about the valuation.

“We remain cautious on valuation, particularly in the context of lofty unit volume growth expectations, and continue to see material downside risk to our December 2023 price target,” wrote JP Morgan analyst Ryan Brinkman recently.

My move now

Given the near-term risks to the share price, I won’t be buying Tesla stock just yet. I may invest in the company in the future. However, right now, I think there are safer growth stocks to buy for my portfolio.

According to Hargreaves Lansdown, Tesla shares were the most frequently bought on its platform last week. The electric vehicle (EV) maker accounted for 2.48% of all buy orders made through the investment firm.

Should I also join the stampede?

Great value for money?

Tech stocks like Tesla tend to carry high price-to-earnings (P/E) ratios. Shares in this category tend to have the potential for rapid earnings growth. So investors are prepared to pay a premium for this.

Elon Musk’s revolutionary business is no different in this respect. At $224.64 per share it trades on a forward P/E ratio of 55 times.

But this isn’t the end of the story. Dig a little deeper and Tesla’s share price could actually be considered excellent value. City analysts think earnings will soar 119% year on year in 2022. This creates a price-to-earnings growth (PEG) ratio of 0.5 times (a reading below 1 indicates a stock is undervalued by the market).

3 problems at Tesla

So why might Tesla shares be trading so cheaply today? One reason is supply chain issues that are affecting its ability to meet orders.

The automaker delivered 343,830 units during the third quarter. That was more than 15,000 short of its reported target.

Musk explained that “it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost.” Chip shortages are another ongoing problem for the firm, one which has prevented it launching any new models in 2022.

Recurrent vehicle recalls are another issue plaguing Tesla. Last month it announced the recall of 1.1m more vehicles due to a window malfunction.

And finally, investors are concerned that demand for its big-ticket items like EVs could sink as the global economy cools.

Why I’m thinking of investing

Tesla clearly faces its share of problems today. However, I still believe the company’s investment case is very attractive. Musk certainly remains bullish over the company’s long-term prospects. In recent weeks he’s predicted that Tesla could “be worth more than Apple and Saudi Aramco combined.”

It’s a pretty outrageous claim. Today, the consumer electronics giant and oil producer have a combined market-cap of $4.5trn. Tesla’s, meanwhile, sits all the way back at around $700bn.

But this doesn’t mean the business doesn’t have colossal investment potential. Even as its third-quarter financials missed forecasts, there were still bright spots to celebrate.

Revenues and earnings are still rising rapidly (up 56% and 55% respectively in Q3). And each of its US, Chinese and German factories delivered record production in the period.

The verdict

Like billionaire investor Warren Buffett, I appreciate companies that offers market-leading products with significant brand power. And Tesla has it in spades, putting it in pole position to exploit the EV boom.

This is why the company continues to steadily build its market share in each of its major regions. Demand is rising strongly, and Tesla is making impressive progress on the production front to meet future orders too.

As a long-term investor, I intend to buy Tesla shares for my own portfolio soon.

Growth for a decade, not a few months

My general thinking is that growth stocks should experience an increase in the share price in the future. Until the business reaches a more mature state and can’t really grow materially much more, the stock should continue to attract buyers. As a long-term investor, buying now and holding for years to come should allow me to benefit from these compounding gains.

For example, the first stock on my radar is Tesla (NASDAQ:TSLA). Yesterday I wrote about the electric vehicle manufacturer and why I think the short-term sell-off isn’t completely justified. With the earnings per share figure growing for each of the past eight quarters, I think the business is becoming much more appealing. As the share price moves back to a fairer valuation (it’s down 7% in the past year), it provides me with a good opportunity to buy.

I get that global supply chain issues could dampen vehicle production in coming quarters. But the infrastructure with the gigafactories is there for the future to be able to ramp up operations when feasible.

It also speaks to my aim of finding a stock that can help me to retire early. Electric vehicles are the future, not just for the next year but for the next decade. The share price gains that I could make if Tesla remains at the forefront of this sector could be very large.

A growth share hidden in the FTSE 250

Another company that ticks the box is Hiscox (LSE:HSX). The FTSE 250 insurance company specialises in small business cover. One area that it focuses on is cyber and data protection. With the UK becoming a more digital economy, I think this area will be a big revenue source for Hiscox in years to come.

It did post a disappointing set of results for the first half of the year. However, most of the issues aren’t problems I envisage staying around for the long term. Some issues mentioned were the war in Ukraine, foreign exchange headwinds with a strong US dollar and the sharp increase in interest rates.

The share price is still relatively muted after the August results, with the price up a modest 3.5% over the past year. If anything, this provides me with a better entry point when I consider buying to hold this for the future.

I feel the business could help me retire early due to the elevated customer demand for specialist insurance types, like cybercrime. It’s also not reached the size of larger players that are in the FTSE 100. With good future performance, it should be able to become a player at the big table.

I’m thinking about buying both stocks now to add to my portfolio.

I’ve had Tesla on my watchlist for years now but I’ve never actually pulled the trigger and bought it. Is it finally time to buy the stock for my portfolio? Let’s discuss.

Three reasons to buy Tesla stock

There’s a lot I like about Tesla.

Firstly, there’s the electric vehicle (EV) growth story. This is still in its early days and Tesla is a market leader. In the most recent quarter, Tesla produced 365,923 EVs and delivered 343,830 of them. These figures are up from 238,000 and 240,000 a year earlier.

Second, there’s its autonomous driving technology, which is very advanced. If I’m honest, this is what really excites me about the stock. If the company can crack ‘Level 5’ driving technology (full automation even in urban environments), the potential is enormous.

Tesla is also making progress in the robot space. Recently, it unveiled its ‘Optimus’ robot at its AI day. This could be another growth driver for the company. Having said that, its technology here appears to be a long way behind that of Boston Dynamics.

Overall, the growth story remains quite exciting.

As for the stock’s valuation, it’s not so crazy any more. Right now, Wall Street expects Tesla to generate earnings per share of $5.85 in 2023. At the current share price, that equates to a forward-looking P/E ratio of about 43. So, it appears that Tesla has grown its high valuation a bit.

Big risks to consider

Having said all that, there are quite a few risks to consider here.

In the near term, the big risk is supply chain issues. These are affecting all manufacturing companies right now, including Tesla. We can see this in the gap between the Q3 production and delivery figures. It’s worth noting that the delivery figure of 343,830 EVs was below Wall Street’s expectations.

Another near-term risk is a weaker consumer. In a recession, people tend to hold off on buying new cars. “While Tesla continues to point to supply constraints as limiting deliveries, the potential for demand destruction looms large,” said JP Morgan analyst Ryan Brinkman earlier this week.

The other major risk is competition. In the EV space, Tesla faces competition from dozens of rivals, including the likes of Ford, GM, BMW, Volvo, and Mercedes Benz. All of these companies are releasing slick new vehicles. Meanwhile, in the autonomous space, Tesla faces competition from Waymo, Cruise, Zoox, and others. So, there’s no guarantee it will be the winner.

Tesla stock: my move now

Weighing all of this up, I’m going to leave Tesla stock on my watchlist for now. I do like the growth story, but I have concerns over the supply chain issues and the spending power of consumers in the near term.

All things considered, I think there are better growth stocks to buy for my portfolio today.

Taking a tumble

The main reason behind the fall yesterday was the disappointing production and delivery numbers for Q3. Tesla historically releases the figures separately from its main financial results that are due later in October. Yet the delivery numbers can be good barometer of how strong revenue and profit will be.

For Q3, the business produced 365,923 vehicles. This fell short of what most analysts were expecting but the company built more cars than it could deliver. Analysts were forecasting deliveries around 358,000, but the final number came in at 343,230.

Based on the above numbers, I think some investors were spooked that the financial results could also disappoint. It has been well reported in previous months that the company is struggling with supply chain issues and higher core commodity costs. This isn’t unique to Tesla, but it isn’t able to escape the problems that the car industry in general is facing.

Why I’m not too worried

With growth stocks like Tesla, people are always looking for figures to beat lofty expectations. The forecasts might already be incredibly optimistic, making them very difficult to hit. But when I take a step back and compare the numbers to the past, I can see that the firm is still doing very well.

Let’s consider previous production numbers. In Q2, the company produced 358,580 vehicles. So, quarter-on-quarter, there’s growth. When I look at the year-to-date performance, deliveries are up 45% on the same period last year. With that in mind, I feel that the fall in the share price yesterday was driven more by short-term speculators rather than long-term investors.

For a long-term investor like myself, a growing business in a tough year like 2022 is something that stands out. If it can perform at this stage of the economic cycle, then in years to come (during a boom period) it should do even better.

Value emerging

I remember periods during last year when the stock’s price-to-earnings ratio was above 200. This was one of the reasons why I stayed away from investing in it. Now the ratio is at 87. That’s still well above average, but isn’t outrageous for Tesla.

Both components of the ratio make it more appealing for me to buy. The earnings per share figure has risen every quarter for the past two years. Yet the price has been readjusting downwards, hence the lower ratio figure.

The main risk to me buying now is that the share price could still be bloated by speculative retail traders. This can cause high volatility, as was seen yesterday, even though I don’t think it was justified. However, I’m happy to put up with these sharp moves, as I think the long-term direction should be higher. I’m seriously thinking about buying some Tesla shares in coming days.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

ASOS

What it does: ASOS is an online fashion retail firm, comprising 17 different brands. It operates around the globe.

By Andrew Woods. My growth stock pick for October is ASOS (LSE:ASC). For the years ended August, between 2017 and 2021, earnings per share (EPS) rose from 77.2p to 128.9p. Over this period, the company had a compound annual EPS growth rate of 10.8%. I consider that to be consistent and strong.

However, ASOS has been operating in a challenging environment for the retail sector more generally. As the cost-of-living crisis has hit, customers have had less disposable income to spend on clothes. Inflation has also led to shrinking profit margins, as wages and costs increase. The share price reflects these problems, having fallen 82% in the past year.

Despite this, sales improved during the summer and the business expects full-year profits to be within the initial guidance range. Another indication that the company is in decent financial shape is its low levels of debt. This means it’s potentially well placed to work on expansion as we emerge from the pandemic.

Andrew Woods has no position in ASOS.

Kainos Group

What it does: Kainos is an IT support services business that helps companies, organisations and governments digitalise operations.

By Zaven Boyrazian. Kainos Group (LSE:KNOS) helps its clients digitalise operations and deploy Human Capital Management solutions through its partnership with Workday. The group serves the public and private sectors, with its most prominent collaboration being with the National Health Service.

Despite record double-digit organic sales growth, the stock has lost nearly a third of its market capitalisation in the last 12 months. It seems the recent drop in profit margins has spooked some investors. And given that the stock trades at a lofty premium of 47 times earnings, this volatility isn’t surprising.

The drop in profitability comes from the steady decline of pandemic tailwinds rather than internal issues. Meanwhile, demand for Kainos’ services continues to grow with a record level of bookings at £349.8m.

While it’s frustrating to see profitability wobble, the underlying business remains uncompromised. And with an impressive amount of potential, I believe the recent downward trajectory presents an attractive buying opportunity, even if the stock still looks expensive.

Zaven Boyrazian does not own shares in Kainos or Workday.

Halma

What it does: Halma is a collection of businesses focused on industrial safety, environmental monitoring, and life sciences.

By Stephen Wright. I’ve been buying shares in Halma (LSE:HLMA) over the last month. So I’m putting my money where my mouth is on this one. 

The reason I’ve started investing in this stock is that I think that it’s finally trading at an attractive price. The company has always looked great but expensive to me.

Halma has a straightforward business strategy. It attempts to acquire businesses and use the cash they generate to buy more businesses.

The company also has a decentralised corporate culture. In other words, it leaves individual businesses to get on with what they do well. 

Halma’s share price fell below £20 per share recently. At those prices, I think that it’s a terrific buy.

If the stock reaches that price again in October, I’ll be looking to increase my investment significantly. But I think Halma is a great company that I’m happy owning shares in.

Stephen Wright owns shares in Halma.

Spire Healthcare 

What it does: Spire Healthcare provides private healthcare services in the UK through 39 hospitals and eight clinics. 

By Royston Wild. The resilience of healthcare-related spending means stocks like Spire Healthcare (LSE: SPI) are popular picks during tough economic times like these.

Theoretically, Spire’s turnover might suffer as Britons start to feel the pinch. As times get tough, people could be tempted to wait that bit longer for treatment and get it for free on the NHS. 

But the size of NHS waiting lists today means that demand for private care continues to rise strongly. At Spire, revenues rose 7% in the six months to June as private revenues jumped almost 22% year on year.

A record 6.8m people were on NHS waiting lists in September. And the Institute for Fiscal Studies thinks the number will get worse before it gets better, possibly even hitting 10.8m people in 2024 before slowly falling. 

This explains why City analysts think Spire will report healthy earnings growth over the short-to-medium term. It’s expected to flip from losses of 7.1p per share in 2021 to earnings of 4.4p this year. And in 2023 earnings are tipped to double to 8.8p. 

Royston Wild owns shares in Spire Healthcare. 

Scottish Mortgage Investment Trust

What it does: Scottish Mortgage Investment Trust is one of the world’s biggest and most famous trust funds. The Baillie Gifford & Co fund invests globally and looks for strong businesses with above-average returns.

By John Choong. While Scottish Mortgage Investment Trust (LSE: SMT) has performed atrociously thus far this year, investors are told to expect a five-year return. As such, the current drop could pave way for a monumental recovery when the global economy eventually recovers.

The trust’s top holdings are mostly growth stocks, with the likes of Moderna and Tesla having plenty of upside to their earnings over the next decade, and could help boost the share price. Additionally, Scottish Mortgage has quite a healthy exposure to China. As the second largest economy in the world reopens from its Covid-19 lockdowns, Chinese equities are seeing steep rebounds, and Scottish Mortgage is expected to benefit from that to some extent.

Either way, with its share price down nearly 50% from its all-time high, this could be an opportune time for me to start a long-term position in a fund with historical success. That being said, investors should be wary that further lockdowns in China could prolong its road to recovery.

John Choong has no position in Scottish Mortgage Investment Trust.

Smithson Investment Trust

What it does: Smithson is a global investment trust run by Fundsmith. It invests in high-quality, small- and mid-cap growth stocks.

By Edward Sheldon, CFA. Smithson’s (LSE: SSON) share price has taken a big hit in 2022 as growth stocks have fallen out of favour and I think this has presented a buying opportunity. Currently, the investment trust is trading at a significant discount to its net asset value (NAV).

I like Smithson’s approach to investing. Like its big brother, Fundsmith Equity, it typically invests in companies that are highly profitable. Meanwhile, it avoids companies that are heavily leveraged, as well as those in industries that are rapidly changing. Names in the portfolio at the end of August included UK property website powerhouse Rightmove, medical technology company Masimo, and cybersecurity specialist Fortinet – all great companies.

It’s worth pointing out that the Smithson portfolio is quite concentrated. So, stock-specific risk is quite high. If a handful of stocks in the portfolio were to underperform, overall performance could be impacted significantly. I’m comfortable with this risk, however. I think Smithson is a good way to get exposure to smaller growth companies listed internationally.

Edward Sheldon has positions in Smithson Investment Trust, Rightmove, and Fundsmith Equity.

Hargreaves Lansdown

What it does: Hargreaves Lansdown is a United Kingdom-based digital wealth management service administering company.

By Paul Summers: The share price of Hargreaves Lansdown (LSE: HL) has been in awful form in 2022 and it isn’t hard to fathom why. 

At a time when most people are just trying to pay their energy bills, it was inevitable that revenue at the company would suffer. Combine this with a reduction in new business and assets under administration and the 35% fall, while severe, makes some sense. 

Even so, I do think this is shaping up to be an attractive contrarian play. A price-to-earnings (P/E) ratio of 17 isn’t screamingly cheap but it does seem a very enticing price for a company that generates some of the highest margins in the FTSE 100. Moreover, the desire of many to take more control over their finances will surely prove a decent growth driver for years to come. 

In the meantime, there’s a 4.7% forecast yield in the offing.

Paul Summers has no position in Hargreaves Lansdown

Even in the past year, the shares have gained 29% in value. But in April they fell below the $1,000 mark and have stayed below it since then. Could they now be heading into four figures again – and does that mean I ought to scoop them up for my portfolio today?

Positive Tesla share price performance

Despite moving around lately, the overall upward trend in the Tesla share price reflects growing investor confidence in the long-term prospects for the business. There used to be widespread concerns about how big the market for electric vehicles really was, whether Tesla could scale up its manufacturing and if the company could maintain strong growth rates in sales. Those are all still risks, but the company has now repeatedly proven that it is able to grow at speed, even from a large baseline. Last year, for example, sales grew by over 70% even though they had already been large in 2020, at $32bn.

If the company can keep proving that its business model is scalable and stay profitable at the same time, I think that will help investor sentiment. That could help support the shares. Looking at the fundamentals of the Tesla share price valuation though, a price-to-earnings ratio of 110 looks very high to me even for a growth company.

$1,000 within sight

Given the positive momentum in recent weeks, I think the Tesla share price could again move above $1,000. If there is good news such as unexpectedly buoyant sales figures, that could happen quite soon. After all, at the current price the shares just needs to move up 8% to get back to the four-figure level.

But if I do not think they are worth $1,000 even if they may be going there, does it make sense for me to buy them?

No plans to buy

As an investor not a speculator, I think the answer is no. I like Tesla as a company, but even the current valuation looks stretched to me, let alone an even higher share price.

The market capitalisation is a massive $962bn. That is more than 10 times the market capitalisation of Volkswagen, which reckons it can overtake Tesla in electric vehicle sales just three years from now. Tesla would have to keep increasing its earnings strongly to grow into the current valuation, in my view.

That may happen and if it does, it might merit the current market capitalisation of close to a trillion dollars. For now though, I think it is priced for perfection. That could mean that the share price falls sharply if a serious issue comes to pass, like increased competition eating into profit margins. So although I can see that positive investor momentum might carry Tesla past $1,000 again, I have no plans to buy the shares.

Despite a 25% rise in the last 12 months, the stock has struggled this year as a combination of factors has seen millions wiped off global markets.

But after gaining some momentum in the last month, rising by over 25%, is Tesla on the road to recovery?

2022 so far

Tesla entered the year trading at $1,200 but has failed to climb above that as rising inflation has seen the growth stock suffer. With inflation rates flirting with the 10% mark in the US and UK, investors have opted to place their money in ‘safer’ value stocks, as opposed to riskier shares such as Tesla. This is not uncommon in volatile times like these. And with the business struggling earlier in the year with supply chain concerns, combined these factors have pushed down the share price.

Despite this, the last month has seen the Tesla share price surge, fuelled mainly by the strong Q2 results the business posted in late July. Total revenue for the period grew 42% year-on-year. And despite supply chain concerns, the firm managed to produce the most vehicles ever in a single month in June.

It wasn’t all good news though, as it did mention a tightening of its margins due to higher inflation and competition for components.

CEO Elon Musk has also been in the headlines this year for his ongoing attempt to take over social media platform Twitter. After initially agreeing to buy the company for $54.20 per share, Musk is now searching for ways to terminate the deal. Any future move he makes would likely impact the Tesla share price.

What I’m doing

So, does the last month’s momentum signal that I should buy Tesla shares?

I’m not too sure. One factor that drives me away is its high valuation. With a price-to-earnings ratio of 107, this shows me the stock is massively overvalued. As a potential investor, this doesn’t sit right with me.

I’m also concerned about competition. Tesla and Musk have continuously adapted and improvised, and that’s led the company to where it is today. However, as the push to an electric world inevitably becomes larger, the pioneer could see its market share dwindle. We’ve already seen many manufacturers successfully enter the space. And with global governments setting ambitious targets for an electric world, this could threaten Tesla.

The business is obviously aware of this. And as a result, has expanded its operations in Europe with a gigafactory in Berlin. It also bolstered its US capabilities with a similar operation in Texas. This will take Tesla’s production to the next level and could potentially assert its dominant market position.

With this said, I won’t be buying the shares today. If there’s a man to navigate a rocky road, it’s Musk. However, I want to see how the rest of this year plays out before purchasing. I’m tempted by Tesla, but I can see its price slipping should these tough conditions we’re facing worsen. I’ll be placing it on my watchlist for now.

Its share price has been pegged back this year, creating an opportunity for me to grab some shares for a cut-down price. However, I’m not sure if I’m ready to take the leap.

Strong results

Tesla is renowned for its strong growth. And its Q2 results certainly lived up to this.

Beating expectations, total revenue for the firm grew 42% year-on-year to $16.9bn, while it also outperformed projections by posting adjusted earnings of $2.27 per share.

With ongoing supply chain issues, such as factory shutdowns in a Covid-19-plagued China, it additionally managed to register its highest ever vehicle-production month in June. On top of this, the business also sold 75% of its Bitcoin, adding nearly $950m cash to its balance sheet. Overall, pretty impressive.

However, Tesla did see its automotive gross margin decrease as factors such as inflation and higher competition for components, such as battery cells, have driven up costs. This is part of wider market struggles, which have seen the NASDAQ fall 24% year-to-date.

Tesla outlook

So, with these strong results, should I be buying Tesla shares?

One deterrent for me is its high valuation. It currently trades on a price-to-earnings ratio of 110. While this has been higher in the past, this shows to me the stock is seriously overvalued.

What also concerns me is competition. As the global push for a transition to electric vehicles continues, many manufacturers have begun to develop their own models to challenge Tesla. With ambitious targets set by an array of firms, should they deliver on these the company may see its market share wane.

With this said, Tesla continues to expand its operations to maintain a firm grip over its dominant position. Its new gigafactory in Berlin has started to produce over 1,000 vehicles per week, which will significantly help with its expansion into Europe. And its gigafactory in Texas is expected to hit the 1,000-car milestone in the coming months.

With multiple new models also in the pipeline, like Tesla’s Cybertruck, this should help the business achieve its bold target of 50% average annual growth in deliveries.

What I’m doing

So, is this enough for me to buy?

I’m not sure. With a 52-week high of $1,243, it’s clear to see the scope the share price has to grow. And the steps it has taken to expand its operations could see Tesla continue to dominate in the long run. However, I won’t be buying today. Its large valuation is a deterrent for me. And I think the stock could slide further as macroeconomic pressures continue to bite. While I’m tempted to buy Tesla, I’m holding off for the meantime.

Does that mean the great growth opportunities for the shares are now in the rear view mirror? Or could I buy today as a long-term investor and still hope for turbocharged performance in future?

The bull case for Tesla

The share price growth we have seen in the past five years reflects Tesla taking its business to a whole new level in that period. Back in 2016, for example, revenues were $7bn. Last year, they were more than seven times bigger, at $54bn. During that period, the company turned a loss of $645m in 2016 into a profit of $6.5bn by 2021.

That did not happen by chance. The company has been refining its business model dramatically, both in terms of manufacturing and its customer offering. The carmaker continues to scale up its production capabilities, with an enormous new European factory opening earlier this year. The eagerly awaited Cybertruck launch could help expand the customer base with new types of buyer.

Tesla has clearly figured out how to make and sell cars many people want. Over time, as it continues to refine that model, the company ought to be able to improve its profit margins. That could further boost the Tesla share price.

The bear case

However, the excitement has always been about more than one thing. Partly it has been about Tesla specifically. But a lot of it has simply been about explosive growth in the electric vehicle market, with companies like Tesla and NIO benefiting to some extent simply because they are early players in the market.

As the market grows, I expect far stronger competition to emerge from established carmakers. With their vast experience of making and selling cars, that could eat into Tesla’s market share.

On top of that, the company’s future business model remains hard to evaluate. As electric vehicles become more common, the subsidies they currently benefit from in some markets may dry up. That could negatively affect the economics of Tesla’s selling prices.

The share price looks high to me

I continue to see a lot of things to like about Tesla as a business. But as an investment, I do not think it is for me. Its market capitalisation of $770bn looks very high for a company with a limited track record of profitability in an industry notorious for high capital expenditure costs. Tesla’s ambitious expansion plans mean it may incur such costs for years to come.

Meanwhile, both the electric vehicle market and Tesla’s business model are evolving quickly. That could be good for its future profit – but it could also be negative. The Tesla share price lacks the margin of safety I typically look for when I invest. So although I admire the firm, I will not be adding it to my portfolio.