Few public companies are more polarizing than Tesla (TSLA) these days. Whether it’s due to founder Elon Musk’s eccentric and often brash personality, his X/Twitter presence or his moonshot proclamations about Robotaxis and automation, Tesla evokes plenty of strong opinions. You either love the company or you hate it. And investors either love Tesla stock or hate it (the haters have missed out on some MAJOR profits). With that in mind, now is a good time to ask what to do with TSLA: buy, sell or hold?
The answer can vary wildly depending on who you ask. So instead of trying to answer it all by myself, I will present the case for each argument by sampling from others who have strong opinions on Tesla stock.
First, some context. Tesla has skyrocketed since the election, rising more than 30% since last Tuesday, and is up 50% in the last month.
More impressively, however, it’s had a phenomenal run in the last five years: it’s up more than 1,300%, is the eighth-largest company in the world by market cap, and is worth more than the five next-largest public automakers combined. If you’ve invested in Tesla basically any time in the last decade, you’ve made a LOT of money.
But would you make money if you bought Tesla stock now that it’s trading around 330 a share and at 98 times forward earnings? What should you do with TSLA: buy, sell or hold? Below, I present the case for each.
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Why You Should Buy, Sell, or Hold Tesla (TSLA)
Why You Should Buy TSLA Stock
Wedbush analyst Daniel Ives is one of the most vocal advocates for Tesla. The long-term Tesla bull recently raised his price target to 400 (from 300), saying, “Trump White House win will be a gamechanger for the autonomous and AI story for Tesla and Musk over the coming years.”
The $400 Wedbush price target would mean another 22% bump in TSLA’s share price while a multi-trillion-dollar valuation for the AI piece would represent more than a double.
Why You Should Sell TSLA Stock
So, there’s the case for buying Tesla stock on the (relatively) cheap. But not all covering analysts are quite so high on the EV maker.
Barclays lifted their price target from 220 to 235 in late October (after earnings) and has an Equal-Weight rating on it (ostensibly a hold), but with a price target 30% below the current share price, it’s not exactly a ringing endorsement.
The bear case against Tesla stock mostly centers around its valuation. The most extreme example of this is GLJ Research, which has had a 22.86 price target on Tesla for quite some time. The pitch there is largely that the low-ball price target values Tesla as a legacy automaker such as Ford (F), or General Motors (GM).
While it seems highly improbable to think TSLA is going to fall to 22 a share, there are valid concerns that the EV market is at a saturation point, with reports that Tesla’s inventory of unsold vehicles is growing so large that you can see it from space.
Still, the number of bears has dwindled in the last few months. If you still own Tesla stock and have made some strong profits on it, you could sell the entire thing now. Or, a better idea might be to hold...
Why You Should Hold TSLA Stock
For the “Hold TSLA” case, I’ll keep it in-house.
Most long-time Cabot readers are no doubt aware that it’s one of the longest-tenured holdings in my Stock of the Week portfolio. It was first added by my predecessor Tim Lutts after it made an appearance in Cabot Top Ten Trader years ago.
Stock of the Week has had Tesla in the portfolio as a Buy or Hold since 2011 and it has returned over 14,000% in that time.
I won’t say what my current rating is on it now, but that kind of long-term success buys a lot of goodwill for a company that’s faced more than its fair share of doubt over the years.
If you’re in a similar boat to us, where you’ve built up a sizable profit in Tesla, especially if you owned it before the furious run-up in 2020 and 2021, your best course of action may simply be continuing to practice patience with the stock.
TSLA: Buy, Sell or Hold?
Which is the right answer on what to do with TSLA: buy, sell or hold?
If you already own TSLA stock, you shouldn’t get rid of it just because it’s taking off to the upside.
As far as buying goes, in the ultra-short term, you may be able to get a better price once the speculation on the new administration settles down in the new year.
But if you’re a long-term investor, the short-term price action may not matter in the long run, and Tesla has a strong track record of proving its doubters wrong.
If you want to know what rating Cabot Stock of the Week currently has on Tesla, consider subscribing today.
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*This post has been updated to reflect current market conditions.