Tesla (TSLA) shares are inching further up on Tuesday, May 20 after Elon Musk revealed plans of leading the EV maker for another five years at least.
“It’s not a money thing. It’s a reasonable control thing over the future of Tesla,” the billionaire told Bloomberg today in an interview at the Qatar Economic Forum in Doha.
Including today’s gain, Tesla stock is up more than 60% versus its year-to-date low.
Why Is Musk’s Revelation a Positive for Tesla Stock?
Musk’s plans of remaining in the hot seat at Tesla is positive for the EV stock as it eliminates uncertainty that often comes with leadership change and reassures investors that the company’s long-term strategy remains intact.
The billionaire entrepreneur has been the driving force behind TSLA’s breakthroughs in electric vehicles, artificial intelligence, and energy solutions. With him in the top role, the automaker has a significantly better chance of keeping ahead of competition in those key markets.
All in all, investors are rewarding TSLA stock this morning as finding a chief executive who can captivate them as much as Elon Musk would have been a “tall task” for the EV maker, said Joseph Spak, a UBS analyst, in his recent note to clients.
TSLA Shares Remain Unattractive Due to Valuation Concerns
Despite a positive update from Musk, investors are recommended caution in buying Tesla stock at current levels due to valuation concerns.
TSLA is currently going for an enormous adjusted forward price-earnings multiple of nearly 180 times, which is unusually high even for a disruptive growth company.
Additionally, the company now faces intense competition from Chinese rivals, including BYD (BYDDY) and Xiaomi, which could make it incrementally more difficult for it to expand its market share further.
The aforementioned competition has already started hurting Tesla’s automotive sales that came in down 20% for the first quarter in late April.
What’s the Consensus Rating on Tesla Inc in 2025?
Analysts also believe that Tesla’s ongoing stock price rally has gone a bit too far.
The consensus rating on TSLA shares currently sits at “Hold” only with the mean target of about $286 indicating potential downside of some 18% from current levels.
