Tesla Stock Lost 5.1%, Buy Or Wait?
Tesla (TSLA) stock is down 5.1% in a day. While history suggests price dips recover, there is risk – specific to growth, profitability and downturn resilience. Consider the following data:
- Size: Tesla is a $1.4 Tril company with $96 Bil in revenue currently trading at $444.26.
- Fundamentals: Last 12 month revenue growth of -1.6% and operating margin of 5.1%.
- Liquidity: Has Debt to Equity ratio of 0.01 and Cash to Assets ratio of 0.31
- Valuation: Tesla stock is currently trading at P/E multiple of 282.3 and P/EBIT multiple of 205.7
- Has returned (median) 60.8% within a year following sharp dips since 2010. See TSLA Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for TSLA, see Buy or Sell TSLA Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and TSLA drops another 20-30% to $311 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
A single stock can be risky, but there is a huge value to a broader, diversified approach we take with the Trefis High Quality Portfolio. That is one way to look at stocks. The Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure.
Below are the details, but before that, as a quick background: TSLA provides electric vehicles, regulatory credits, and designs, manufactures, installs, sells, and leases energy generation and storage solutions.
2022 Inflation Shock
- TSLA stock fell 73.6% from a high of $409.97 on 4 November 2021 to $108.10 on 3 January 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 11 December 2024
- Since then, the stock increased to a high of $479.86 on 17 December 2024 , and currently trades at $444.26
| TSLA | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -73.6% | -25.4% |
| Time to Full Recovery | 708 days | 464 days |
2020 Covid Pandemic
- TSLA stock fell 60.6% from a high of $61.16 on 19 February 2020 to $24.08 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 8 June 2020
| TSLA | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -60.6% | -33.9% |
| Time to Full Recovery | 82 days | 148 days |
2018 Correction
- TSLA stock fell 53.5% from a high of $25.67 on 18 September 2017 to $11.93 on 3 June 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 18 December 2019
| TSLA | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -53.5% | -19.8% |
| Time to Full Recovery | 198 days | 120 days |
It is a good thing to keep in mind how low TSLA could go during a downturn. And you should also check how the stock fared when compared with the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 — the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.