Tesla stock’s up 19% in 2023! Should I invest?

Electric vehicles (EVs) are made by Tesla (NASDAQ: TSLA ) is known for its rapid acceleration. But it’s not just about the company that has gained speed lately. Tesla stock is up 19% since the start of the year less than three weeks ago.

This happens after a poor performance. Tesla stock has fallen 61% over the past year.

However, looking at the chart, I wonder if in the near future we could see a return to early 2023 when EV stocks turn a corner and start to rise again.

Considering, should I buy some for my portfolio now?

Good news and bad news

I think the upward move reflects the renewed optimism of some investors. I see a good reason behind that. In the last quarter of last year, Tesla delivered more than 405,000 vehicles to buyers. Last year’s shipments showed annual growth of 40%, with production up 47%.

Tesla’s manufacturing footprint has been expanded, so it can continue to increase output this year. The company’s long-awaited pickup truck model will now hit the manufacturing line this year. The end of the pandemic restrictions in China may also help the company as it looks to grow strongly in that market.

All of that could help boost profits at the company, which could help support Tesla’s stock price. But there is bad news too.

Competitors are aggressively launching their own EVs. I expect the market to grow strongly in 2023, with Tesla just one player among many. The company has reduced the selling price rapidly. That can increase sales volume, but at the expense of profits – and profits.

Tesla stock value

Even if the business is doing well in 2023, that may not mean Tesla stock has a good year ahead of it.

After a flying start until 2023, Tesla now has a market capitalization of more than $400bn. That is also below the peak. Last January, the company was valued at $1.2tn.

The market capitalization still seems too high to me. It is almost 100 times net income last year. The dizzying price-to-earnings ratio could turn even higher if big price cuts lead to smaller profits this year.

In contrast, compete Ford has a market capitalization of $50bn despite making $17bn last year. Admittedly, this is a great performance for old times. Ford is expanding its EV business but I think Tesla has important differences, from the brand to a more focused business model.

But Tesla’s stock price is still too high for my taste.

Don’t buy it

Therefore, I have no plans to add Tesla shares to my portfolio. I am impressed by the phenomenal growth rate of the business and think it has a strong future. But that alone does not make it a good investment at current prices.

Until I feel more comfortable with the value, Tesla just doesn’t fit my investment style. For that to happen, stock prices must fall, or earnings must balloon.