This has been a wild month for Tesla (NASDAQ: TSLA). The Tesla inventory price jumped 20% in a single day’s buying and selling. For an organization with a market capitalisation of near $800bn in the mean time, that’s uncommon.

Over 5 years, the electrical car maker has been a star performer. Its share price has grown by 1,119% throughout that interval.

So, if I had invested round £8,200 5 years in the past I’d now have a holding price £100,000 (ignoring alternate price fluctuations between the pound and greenback throughout that interval).

But up to now in 2024, even after that leap this month, Tesla inventory is up simply 3%.

Over a 10-month timeframe, that’s not the form of efficiency many traders have grown to anticipate from the corporate is latest years.

What’s going on – and would possibly now lastly be the time for me so as to add the corporate to my portfolio?

Tesla’s shifting world

Tesla is extra than simply an electrical car enterprise. Its vitality storage operation is rising and has important long-term potential in my view, for instance.

Within the third quarter, Tesla deployed 6.9 GWh of such merchandise. That’s 47% of what it deployed throughout the entire of final yr, which in flip was double its prior yr stage.

However Wall Avenue’s focus stays firmly on the automobile aspect of the enterprise. Right here, I feel the risky efficiency of Tesla inventory could be put into perspective.

Tesla’s car deliveries grew 6% yr on yr in its most up-to-date quarter. With over 460,000 autos delivered throughout the interval on high of a big put in buyer base, that is an more and more mature and sizeable enterprise.

However the business panorama is altering considerably, I reckon. Rivals have elevated their gross sales too. That more and more places strain on revenue margins throughout the business, together with for Tesla.

Moreover, price-insensitive early adopters have lengthy since been driving their Teslas. To continue to grow gross sales volumes at something like its historic price, Tesla will more and more want to supply extra reasonably priced vehicles for the center market. That could be a threat to its revenues and particularly its revenue margins.

Ongoing questions on valuation

I feel that context helps clarify why Tesla inventory has been transferring about regardless of the corporate’s rising gross sales, sturdy model, massive person base, and alternatives in areas akin to automated taxis.

In the meantime, questions on Tesla’s valuation stay.

Rival BYD overtook Tesla final quarter when it comes to gross sales, but its market capitalisation is round one-seventh that of its US rival.

A direct comparability might not be overly useful: BYD is listed on a special inventory alternate, has a considerably totally different enterprise to Tesla’s as it’s extra squarely focussed on autos and batteries and likewise has strengths in several markets in comparison with Tesla. Nevertheless it does elevate the query of whether or not Tesla deserves its sizeable share price premium relative to friends.

Tesla inventory now trades on 69 instances earnings. Even given its development prospects, that’s far richer than I’m snug with as an investor.

For now, then, I’ve no plans to  add the share to my portfolio.