Key Points
Tesla (NASDAQ: TSLA) is well off a 52-week high that approached $500 per share. At its current price of around $360, the stock is also comfortably below the average analyst price target for the electric vehicle (EV) manufacturer. Yet just because Tesla appears undervalued to the analysts, does that make it an obvious buy?
Tesla’s financials paint a mixed, but interesting, picture. Elon Musk’s company posted a record second quarter of EV deliveries, and total revenue jumped 26% year over year to $28.2 billion. All that would appear to be great news, until you look at the company’s profitability. Free cash flow turned negative as capital spending soared. Margins are under pressure as Tesla is on course to invest up to $25 billion this year in its new Cybercabs, AI initiatives, and robotics.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
To me, this is more of a story of short-term pressure than longer-term concerns. The investments Tesla is making today are somewhat speculative, and there are real execution risks to consider, but for investors with long time horizons, the payoff could be enormous. I’m particularly optimistic about Tesla’s energy storage capabilities, which are becoming increasingly important as the AI boom continues.
Image source: The Motley Fool.
Tesla still trades at an incredibly lofty valuation, with its forward and trailing P/E ratios at about 150 and 330, respectively, and a market cap of roughly $1.4 trillion. However, for the most bullish investors, the stock looks compelling at less than $400 per share.
I wouldn’t say it’s an obvious buy because of how risky Tesla’s endeavors tend to be. Still, if you have an elevated risk tolerance and at least half a decade’s worth of patience to hold on to your investment, shares priced below $400 could arguably be considered reasonable.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $598,219!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $61,037!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $421,997!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of September 7, 2026.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
