Tesla stock is a long-term investment to consider — but only for the trader willing to carefully assess the risks.
Charles Harris, portfolio manager at O'Neil Global Advisors, views Tesla as an innovator that deserves patience over a prolonged time horizon. "I still have a large position in Tesla – particularly in my non-margin accounts – which I'm just holding," he said to Investor's Business Daily's "Investing with IBD" podcast. "I haven't sold in, I guess, about four years since 2020."
Harris said he traded Tesla stock actively in its rapid Covid-era advance, with shares accelerating on improving fundamentals alongside tax breaks and consumer credits beneficial to the automaker.
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Tesla Stock's Volatile Action
For those who want to own Tesla for the long haul, the strategy matters. Harris says Tesla stock's volatile performance in recent years has made it tough to handle a large position.
"I really got killed holding Tesla," Harris said of his outsize margin account investment in the EV giant. After a rough 2022 for the stock, Harris adjusted his approach to focus more on non-margin trading for his Tesla holdings.
Tesla's roller coaster stock performance has continued into 2025. After hitting an all-time high of 488.54 in December, Tesla stock suffered a steep sell-off following CEO Elon Musk's close involvement with the Trump Administration, becoming the target of protests.
Shares crumbled as much as 47% in a four-month span.
Tesla's problems were exacerbated as the market entered a bearish phase in February due to tariff-related uncertainty. "When you enter a bear market regardless of the conviction you have in a stock or how well you've done, if you're going to hold through a base or hold a long-term stock, you can't do it on margin," Harris said.
Tesla stock is now on the road to recovery, with shares rallying 46% from their early April lows, trading near 342 by midday Friday. That puts Tesla roughly 30% below its previous highs.
The S&P 500 has advanced some 15% over the same time period.
Managing Tesla Stock Long-Term
One way of managing a long-term position in Tesla stock is to carefully consider one's position size. Trading a stock on margin, for instance, will magnify disappointing performance in a stock.
Traders should also be careful about thinking a particular stock could be "the next Apple."
"I was using Apple as a precedent for Tesla, but they're not the same thing," Harris said. Unlike Tesla, Apple never saw a three-year consolidation period.
Some technical analysis experts will rely on what they call "historical precedents" for individual stocks or the major indexes to serve as guides for what could potentially unfold in the current market environment.
But even Apple major corrections during the 2008 financial crisis were not as severe as the corrections seen in Tesla stock, Harris said.
"You can't have too much faith in a precedent," he said. Following risk management rules should supersede one's conviction in a stock's fundamental story.
EV Stocks And Trump's Tax Bill
While much of the current value of Tesla stock is reliant on future robotaxi and AI initiatives, investors are currently looking at the potential impact of changes to tax incentives for electric vehicle stocks.
The U.S. House of Representatives on Thursday passed President Donald Trump's tax bill, which slashes tax credits and policies intended to boost EV adoption.
The tax bill does include a "special rule" to keep IRA tax credits in place through "taxable year" 2026, but only for automakers that haven't yet sold 200,000 EV units by the end of 2025.
This would mean that Tesla, General Motors, Ford and others would not be able to take advantage. However, this would give extra runway for Lucid Group, Rivian Automotive and other EV startups.
General Motors, Ford, Rivian and Lucid declined during Friday trading while Tesla advanced.
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