As of April 8, 2022, Tesla is one of the top 10 most valuable publicly traded companies in the world by market cap, soaring past names like Meta (formerly Facebook), Walmart, and JPMorgan Chase. Given Tesla’s rapid rise, many people may wish they had invested in the stock years ago.
Of course, hindsight is 20/20 when it comes to investing money. Nevertheless, it’s not just Tesla’s market cap that has exploded. Shares have increased by more than 20,000% in value since the company went public in 2010. The past few months have been a bit rocky, however, with the stock trading lower than its price in early November 2021.
Here’s a look at how much money you could have made if you invested in Tesla in 2017 and if it’s still worth investing in today.
The history of Tesla
Tesla (TSLA) was founded in 2003 as Tesla Motors by Martin Eberhard and Marc Tarpenning. Elon Musk joined Tesla in 2004 when he became the largest shareholder by purchasing $6.5 million worth of stock and is the company’s current CEO.
The first several years of Tesla’s history were focused on the production of the Roadster, a premium sports car. Only about 2,450 Roadsters were made, which is perhaps why Tesla flew under the radar in its early years. The company also didn’t go public until June 2010, nearly seven years after its founding.
Tesla’s initial public offering (IPO) coincided with the beginning of its production of the Model S sedan, the car that would ultimately take Tesla mainstream. Notably, Tesla was the first American car company to go public since Ford in 1956. Tesla shares debuted at $17, slightly above the target range of $14 to $16. By the time trading closed on the first day, the price had already increased by 45% to nearly $25.
In the ensuing years, Tesla introduced three more vehicles to its main product line: Model X (2015), Model 3 (2017), and finally, Model Y (2020). While Tesla has teased other vehicles, such as Cybertruck and Semi, neither have entered production.
Tesla in 2017
Tesla shares have experienced monumental growth since the 2010 IPO. However, the increase in its share price was slower and steadier for the first several years. In September 2017, for instance, Tesla shares peaked at $385. However, since that was before the five-for-one stock split in 2020, the post-split peak in 2017 was $77.00.
Tesla’s stock performance (2017-2021)
|Year||Avg. stock price||Year open||Year high||Year low||Year close||Annual % change|
At the 2017 peak, a $1,000 investment would have bought you 12 full shares with a total value of $935. If you held those shares, they would be worth more than $12,000 today. Since 2017, Tesla shares have had a return of about 76% per year.
Tesla in 2020
As mentioned, Tesla split its stock five-for-one in August 2020. Often, stocks spike after a split since either the company is doing well or investors perceive it that way. Shares of TSLA increased by 80% in the three weeks from just before the split announcement, and the announcement resulted in its post-split share price going from $297.40 on August 3, 2020, to $475.05 on August 31, 2020.
You might wonder what that would mean for your investment in 2017. Recall that Tesla peaked at $77.00 in 2017 using post-split prices. Hence, in just under three years, those shares would have gained almost $400. Overall, that’s a six-fold increase in three years. A $1,000 investment in 2017 would have grown to $4,783 by the end of August 2020 while a $5,000 investment would have been worth $23,916.
|Initial investment||Value in 2017 ($77.00/share)||Value in 2020 ($475.05/share)|
Tesla in 2022
Although Tesla shares have been a bit volatile as of late, they are worth many times more than they were in 2017. As of April 8, 2022, shares of Tesla were priced at $1,025.49. This means Tesla shares have increased by more than 13 times since their 2017 peak. If you invested $1,000 at the peak in 2017, your investment would have grown to about $13,161 in 2022. If you invested $5,000, it would have grown to $65,804.
|Initial investment||Value in 2017 ($77.00/share)||Value in 2022 ($1,025.49/share)|
Could Tesla stocks keep rising?
From an investment perspective, things still look quite good for Tesla, which means its share price could continue to rise over the next several years. Although its stock hit a low point in early 2022, falling to around $760, it has since recovered and is trading at nearly $1,000 once again. In addition, its earnings are trending in the right direction.
For instance, Tesla’s revenue for Q4 2021 was $17.72 billion compared to $10.74 billion in Q4 2020. Likewise, its net income has increased from $296 million to $2.34 billion. Meanwhile, Tesla had a double-digit profit in each of the last two quarters of 2021. Some analysts forecast a moderate increase in TSLA shares over the next year, while others forecast a slight decrease.
To be sure, the electric vehicle market is heating up with several new startups rolling out electric vehicles. The Lucid Air could be a direct competitor to the Model S, and the Rivian R1S could rival the Model X. Meanwhile, legacy automakers like Ford are launching their own electric vehicles (EVs), like the Mustang Mach-E, which could challenge the Model Y. All of these new vehicles could take some of Tesla's market share over the next several years and threaten its lofty share price.
Should I still invest in Tesla?
Despite the increase in competitors, Tesla still has a lot going for it. Teslas have been called a “giant phone on wheels,” giving a nod to their reliance more on software than on hardware to get things done. Indeed, EVs of the future are likely to be more high-tech with sleek interfaces and an abundance of software features.
In this sense, Tesla is still well ahead of the competition, with its cars featuring high-tech all-digital displays and over-the-air (OTA) software updates that continuously improve its industry-leading product.
While no one knows for sure that Tesla shares will continue to increase, the company is well-positioned to continue its success. No single automaker can serve the entire U.S. market, and Tesla has cultivated a loyal following in its short history.
Still, before investing in a single company, it’s important to look closely at its track record first. Even if you decide to invest in Tesla, make sure you diversify by investing in other companies to give yourself the best odds of finding a winner.
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