Editor’s Note: Early in my career, I worked for a manager who told me that he preferred to hire people that drove fast cars. To his way of thinking, the type of cars people choose to drive reflects their personalities.

He wanted aggressive salespeople that were willing to take chances. This was during the early 1980s, when the U.S. economy was recovering from a protracted recession. Winning a big sale was tough.

He may not have hired me if he saw the car that I drove back in those days. It did not reflect my personality, but it did say a lot about the status of my bank account. It is that circumstance that turned out to be a more accurate indicator of future success as I methodically worked my territory in a beat-up Ford Maverick.

Fortunately, I have a lot more money to spend these days. However, I am still a miser when it comes to cars. Even when I had a chance to splurge and buy myself a new car earlier this year, I took the financially prudent route and bought a slightly used vehicle that is safe and reliable. Elon Musk would not approve.

Spinning Out

Speaking of Elon Musk, his electric vehicle (EV) manufacturing business, Tesla (NSDQ: TSLA) has been on a wild ride lately. Three weeks ago, TSLA closed below $214 and was in negative territory for this year.

But since Donald Trump’s resounding general election victory last week, TSLA has taken off. It opened this week above $346, breaking out of the trading range it has been stuck in since April 2022 as shown in the chart below.

That was shortly after the Fed began raising interest rates. And since most new automobile purchases involve some form of credit, Wall Street feared that Tesla’s sales would be adversely affected.

I wrote about Tesla eight months later in December 2022 (“Taking Tesla for a Spin”). At that time, TSLA was trading around $150.

I said then, “If I ever were going to open a position in Tesla, now would be the time. The stock is cheap, and Tesla is the industry leader in a huge growth market.”

However, I had serious concerns about Elon Musk’s erratic behavior. He had recently acquired Twitter (now X), which was consuming a lot of his time and money. I feared that Tesla would suffer as a result.

Dirt Cheap

I did not buy Tesla stock then, but one month later I added it to the Personal Finance Growth Portfolio after it fell beneath $125. At that price, TSLA appeared dirt cheap compared to the overall stock market.

I still wasn’t comfortable with Musk’s autocratic management style. But at that price, the stock was too attractive to ignore.

I noted then, “Elon Musk has long been criticized for overpromising and underdelivering when it comes to production and delivery schedules. That is no longer the case. Now, the company is consistently performing at or near the lofty goals articulated by Musk.”

That was certainly the case during the third quarter of this year. Tesla’s fiscal 2024 Q3 results released three weeks ago included a 223 percent increase in free cash flow powered by a 24 percent rise in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Those impressive figures were achieved despite a modest increase in automotive revenues of 2 percent. However, total revenues rose 8 percent thanks to a 52% jump in energy generation and storage revenue.

Not only is that division growing fast, but according to the company it is already profitable: “The Energy business achieved a record gross margin of 30.5% in Q3, a sequential increase of 596 bps.”

Same Dilemma

This January marks three years from when I recommended Tesla to my readers. It is worth nearly three times more now than it was then.

As a result, it is currently valued at nearly 100 times forward per share earnings. That is roughly four times greater than the same multiple for the S&P 500 Index.

That raises the question, do I hang on to Tesla or sell it to lock in our gain?

I find myself in the same dilemma that I faced two years ago. I like the business, but I don’t know if I can trust Elon Musk to do what’s best for its shareholders.

I’m also concerned about Musk’s reported interest in working with the Trump Administration. It’s not like the man doesn’t have enough to keep him busy.

If Musk commits to working for Trump, I’m worried that he won’t have enough time to effectively manage Tesla. That might be a good thing. In that case, I’d like to see him step down as the company’s CEO and let someone else handle that job.

But if he decides to focus on his businesses, then Tesla should be fine. Once again, it all boils down to which way will Elon Musk turn next. As for all other Tesla shareholders, they are riding shotgun with one of the world’s least predictable minds behind the wheel.

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