With a market capitalization of well more than half a trillion dollars, Tesla Inc. (NASDAQ:TSLA) has seen absolutely incredible stock price appreciation of late. I’d encourage any investor to check out a long-term stock price chart for this company to see how truly parabolic this equity has gone in recent years. This sort of mania around a stock is uncommon, however one must wonder just how high this stock could eventually go, particularly given how much future growth is built into this stock today.
The company is valued at roughly 20-times revenue and has an astronomical price-to-earnings ratio and other valuation ratios based on the little earnings the company has generated. This valuation is generally considered to be highly inflated by most in the financial community, though many investors continue to hold onto this stock for momentum, growth, or aggressive growth investing strategies.
As a conservative long-term investor, I’d have to caution readers to take care with this stock. Despite obviously having been on the wrong side of this trade in recent years, having steered clear of Tesla altogether, one has to marvel at the changes the company has brought forward in terms of innovation in the electric vehicle space. That said, for investors with any inkling at all of what valuations should look like, this company is truly in the stratosphere. Staying invested in high quality companies with solid balance sheets and steering clear of speculation remains a solid long-term strategy I’d encourage readers consider.
Invest wisely, my friends.