While CEO Elon Musk’s recent investment in Twitter has been stealing the headlines, in the background Tesla (NASDAQ: TSLA) shares have slowly been grinding away. Despite a slow start to 2022, the last month has seen a 28% rise in the share price. And as a result, the stock recently broke through the $1,000 barrier once again.
So, will we continue to see Tesla shares rising in the months ahead? And should I be adding the electric vehicle (EV) manufacturer to my portfolio? Let’s find out.
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Tesla shares rise
There are a few reasons why the stock has seen a recent jump. One of these is the opening of Tesla’s first European gigafactory. Opened in late March in Germany, the long-awaited factory will help support the firm’s expansion into Europe. It’s expected to produce 500,000 vehicles and millions of battery cells every year.
In line with this, in early April Tesla released its latest set of delivery results. For Q1, Tesla delivered 310,048 vehicles. This represents a major jump from the 184,800 delivered in the same period last year. This is all the more impressive, considering the supply chain issues it has been facing. Based on these numbers, its clear to see why Tesla shares have jumped.
Tesla concerns
Yet, despite these impressive figures, I do have a few concerns with Tesla.
The first of these is its high valuation. Tesla’s current price-to-earnings (P/E) ratio is an extortionate 215. There is no doubting this places Tesla as seriously overvalued. For comparison, General Motors has a P/E of just 5.78.
On top of this, the firm also faces a variety of problems in the near future. Despite the impressive delivery results, Tesla is set to continue to face supply chain issues in the months ahead. And as the cost of living continues to rise, this may impact future sales as people shy away from making purchases. In the current economic conditions, people also deter away from growth stocks, in part due to their volatility. Should investors begin to offload Tesla shares, the price will take a hit.
Further, while there is no doubting that Tesla always has one eye on the future, so does its competition. Many established manufacturers have been venturing into the EV space as the transition to electric seems to be inevitable. For example, Ford recently pledged to be all-electric by 2030. And it’s beginning to take strides towards this through the $1bn transformation of its Berlin site. Should these firms be successful in their moves, Tesla may not enjoy the large market share it currently has in times ahead.
Will the rise continue?
Despite the strong Q1 numbers, I’m not too sure Tesla shares will be able to keep up the impressive performance. The business will potentially face massive headwinds in the month ahead. And its high valuation steers me away from the stock. Because of this, I won’t be buying Tesla shares today.
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