The Remarkable Rise of Tesla: A Decade of Growth and Investment Insights
Reflecting on 2015: A Year of Change
In 2015, significant global agreements were made to combat climate change, Tom Brady and the New England Patriots faced accusations of football deflation, and the Supreme Court legalized same-sex marriage across the United States. During this transformative year, Tesla (NASDAQ: TSLA), originally known as Tesla Motors, was making its own history. Founded in 2003, Tesla introduced its first standalone charging stations in California in 2012 and celebrated its first profitable quarter in 2013. In 2015, the company expanded its offerings by launching solar energy products. Have you ever wondered how an investment in Tesla back then could have paid off?
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The potential returns from investing in Tesla in 2015 are staggering. If you had put $1,000 into Tesla shares at the beginning of that year, it would be worth approximately $27,615 today, marking an impressive average annual gain of around 39%. In comparison, the S&P 500 averaged a much lower annual return of 12% over the same period, which could be boosted to 13% with dividends reinvested. Historically, the S&P 500 has seen average annual gains close to 10%, making Tesla’s decade of growth particularly remarkable.
Tesla’s current valuation reflects its success, standing at around $1.3 trillion. This positions the company among the “Magnificent Seven” stocks alongside heavyweights such as Apple, Amazon.com, Alphabet (Google’s parent), Meta Platforms (parent of Facebook), Microsoft, and Nvidia.
However, investing in Tesla comes with its risks. The stock experienced a remarkable rise of over 50% last year but has averaged only a 2.49% growth over the past three years. More encouragingly, the average growth over five years has been a robust 67.6%. As you contemplate investing in Tesla, you should think about its future performance and potential stock value in 2025.
Investors should also take note of Tesla’s current valuation, which seems high with a recent forward-looking price-to-earnings (P/E) ratio of 110, significantly above its five-year average of 77. Growth has begun to slow, indicating a need for caution.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is also on the board. Suzanne Frey is an executive at Alphabet and a board member. Other board members include Selena Maranjian, who has investments in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends several companies, including Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool also suggests specific stock options involving Microsoft. The Motley Fool has a disclosure policy.
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