Tesla (NASDAQ: TSLA) inventory continues to make lower-case fools out of Fools like me.

Again in November, I questioned whether or not it had grow to be a meme inventory at $320. I ended with, “I proceed to admire Tesla as a enterprise, however not the inventory at $320, which I reckon is demonstrating meme-like qualities. As such, I feel there are different extra engaging progress shares for my cash“.

Since then, the share price has risen 30% and now trades at $415!

Like Elon Musk’s superhuman work schedule, Tesla shares usually defy logic. I knew that. Extra idiot me.

So, ought to I eat some humble pie and simply make investments? Let’s dig in.

Excessive multiples

Tesla shares are at the moment buying and selling at a price-to-sales (P/S) a number of of roughly 15. In different phrases, traders are paying $15 for each $1 of Tesla’s income. The ahead price-to-earnings (P/E) ratio is round 120.

I’d be a hypocrite to pompously say that I might by no means make investments at such ridiculous multiples. I just lately took a small place in language studying agency Duolingo when the inventory was buying and selling at 20 instances gross sales and a ahead P/E above 100.

Nevertheless, Tesla has stopped rising, no less than for now, whereas Duolingo has been rising at a 40% clip.

After all, I’m evaluating apples to oranges right here. However my level is that it is perhaps a very long time, if ever, earlier than Tesla returns to posting top-line progress of 40%. Or the long-term 50% annual compound annual progress charge (CAGR) it was projecting in early 2021.

To some extent, that’s comprehensible, as Musk beforehand admitted in late 2023: “Yeah. I mean, at the risk of stating the obvious, it’s not possible to have a compound growth rate of 50% forever or you will exceed the mass of the known universe.”

Nevertheless, Tesla is valued like a ultra-high-growth firm, which it isn’t anymore. That is why I’m reluctant to speculate.

But it surely’s all concerning the robots, foolish

Musk says the corporate shall be churning out robotaxis in 2026. Then probably humanoid robots after that.

To make sure, these are mind-boggling huge market alternatives, ones which I’m enthusiastic about, regardless of the technical and regulatory hurdles that should be surmounted. It’s exhausting to not be excited after watching the Optimus Bot bartender pouring draft cocktails on the latest Tesla AI occasion! 

Clearly, it’s the future potential of those initiatives that types the idea of the corporate’s excessive valuation as we speak. Nevertheless, it leaves me questioning how a lot of that is already priced in.

To provide an reverse instance, have a look at Alphabet inventory, which trades at simply 23 instances ahead earnings. Arguably, traders shopping for that inventory are getting the core search, cloud, and YouTube companies, that are all nonetheless rising, then all the opposite futuristic bets bundled in without spending a dime. That features Waymo robotaxis (already doing 1000’s of driverless journeys per day), quantum computing, and extra.

Once more, Tesla is the alternative of that. It’s valued on the futuristic bets far more than the core EV and vitality storage companies. That doesn’t strike me as very engaging, which is why I’m going to provide the inventory a swerve.