Tesla (NASDAQ: TSLA) shares have experienced remarkable growth, with their value nearly doubling over the last few months. Investor optimism is high for the electric vehicle (EV) manufacturer as it looks towards significant advancements in the upcoming years, continuously pushing into innovative areas such as self-driving cars and humanoid robots.

Market momentum can be potent, but predicting exactly how high the stock price will rise is uncertain. Ultimately, the company’s fundamentals will determine whether its soaring stock price is sustainable or will inevitably decline.

Should you consider purchasing Tesla stock while it is priced under $450 per share? Here are some key points to consider.

The Rise in Tesla’s Stock Is Driven by More Than Just EV Sales

A widely held view is that Tesla distinguishes itself from traditional car companies. This perception stems from its diversification into other areas, prompting some investors to regard it as a tech company. Proponents argue that projects like the Cybercab (an autonomous taxi service) and the Optimus (humanoid robots) could offer huge potential in the next decade.

This perspective likely explains the stock’s impressive performance. CEO Elon Musk’s positive relationship with the Trump administration could facilitate Tesla’s navigation of the regulatory environment for its autonomous ride-hailing service. Since the election on November 5, the stock price has increased by nearly 70%.

Musk anticipates that ride-sharing will commence in Texas and California this year, with the Cybercab projected to enter mass production by 2026.

He also plans to introduce Optimus robots in 2026. The company is currently working on the robot’s localized artificial intelligence (AI), which enables it to interpret and respond to its surroundings—similar to its full self-driving technology. Musk recently claimed that Tesla now possesses the necessary computing power to enhance this AI development.

While Promising, These Opportunities Raise Important Questions

Musk believes that Tesla’s long-term value hinges more on these upcoming ventures than on its current automotive operations. Yet, investors must be cautious not to let future prospects overshadow present realities. The truth is, Tesla’s vehicle division—which recently reported its first annual production decline in 2024—still accounts for nearly all of the company’s revenue and profits.

Furthermore, there is a strong incentive to categorize Tesla as a technology firm rather than a traditional automaker due to its elevated valuation compared to competitors. Tesla’s stock is currently valued at over 15 times its sales, whereas Toyota, which boasts higher profit margins than Tesla, has a price-to-sales ratio of less than 1. Though Tesla is growing at a faster pace, does that justify such a drastic difference in valuation?

Data by YCharts.

What’s the conclusion? Tesla presents exciting technological possibilities, but these are likely already reflected in its current share price. Investors remain uncertain about:

• Whether Tesla will successfully launch these products.
• When these launches might contribute significantly to the company’s financial performance.
• The potential profitability of these new ventures.

It’s possible that, despite successfully executing its plans over the next few years, Tesla’s stock may stagnate while the financial metrics catch up to its high valuation. Conversely, delays or failures in rolling out these products could lead to the market reevaluating Tesla’s lofty stock price.

Is it the Right Time to Buy Tesla Stock?

There is a chance that Tesla’s Cybercab and Optimus may be highly lucrative from the outset, resulting in the stock climbing even further.

Investing often involves making informed predictions based on various potential outcomes. As things stand today, I believe there are more scenarios where investing now could yield poor returns rather than positive ones. While I recognize Tesla’s potential beyond just being a car manufacturer, this does not mean shares should be purchased at any price.

Currently, I don’t recommend buying the stock at around $450 per share—at least not until there’s a solid financial basis to support that level.

Investors interested in Tesla may find better investment opportunities if the broader market experiences a downturn. Hence, exercising patience to see how the company’s current momentum develops could be beneficial. For those worried about missing out, starting with small investments while holding some cash for potential price drops could be a wise strategy.

Justin Pope has no stock positions in any of the companies mentioned. The Motley Fool holds positions in and recommends Tesla and follows a disclosure policy.

The Motley Fool collaborates with YSL News to provide financial news, analysis, and commentary aimed at empowering individuals to manage their financial futures. Their content is produced independently from YSL News.

Don’t Miss Out on This Second Chance at a Lucrative Opportunity

Special Offer from The Motley Fool: Do you sometimes feel you’ve missed your opportunity to invest in top-performing stocks? If so, you’ll want to check this out.

Our expert team occasionally issues a “Double Down” stock recommendation for companies they believe are poised for substantial growth. If you’re concerned that you’ve missed your chance to invest, now might be the perfect time to get in before it’s too late. The figures speak volumes:

• Nvidia: if you had invested $1,000 when we doubled down in 2009, you would now have $357,084!
• Apple: if you had invested $1,000 when we doubled down in 2008, you would be holding $43,554!
• Netflix: if you had invested $1,000 when we doubled down in 2004, your investment would be worth $462,766!

Currently, we are issuing “Double Down” alerts for three exceptional companies, and this may be one of the last chances like this in a while.