Elon Musk, CEO of Tesla Motors, poses during a television interview after his company’s initial public offering at the Nasdaq Market in New York on June 29, 2010.
Brendan McDermide | Reuters
LONDON – Tesla stock is more expensive than its operations and in the bubble region, according to Vitaly Kalesnik, Europe’s partner in research affiliates and head of research.
“While Tesla is a great company, there are very strong indications that Tesla stocks are in high spirits,” Kalesnik told CNBC’s “Squawk” X on Tuesday.
Tesla’s share price was 9,649.86 dollars before the market opened on Tuesday and the company is currently valued at 16,616 billion, more than the combined nine major carmakers.
Kalesnik believes that Tesla’s current share price is too high considering its sales, car production numbers and other fundamentals. “When we look at the types of assumptions that need to justify these values, one will need very aggressive assumptions,” he said.
Tesla’s margins are “largely identical” to the rest of the industry, and Kalesnik said that means “Tesla’s current valuation is in the bubble realm.”
Tesla’s share price has risen more than 650% in 2020, with some key events helping to boost the company’s stock. Following an epidemic-related shutdown and legal battle in the state, in May, Tesla began production at its California gigafactory. In July, Tesla posted its fourth straight profit and post-delivery estimates. Shares also gained momentum at the end of the summer when Tesla announced its first stock split.
The electric car maker announced it would launch on the S&P 500 after Tesla’s shares hit a record high, a stock market index that measures the performance of the 500 largest companies listed on stock exchanges in the US.
“When it is included in the S&P 500, investors have to buy it at a very high price, and that is likely to have very bad consequences for investors.”
Shares of Tesla tumbled on Monday as it started on the S&P 500 and the stock ended down 6.5% from a record high in the previous session.
Competition from Apple?
Optimism was furious for Tesla stock after Reuters reported, while Apple plans to start production of electric passenger vehicles by 2024. The new technology in the CarPal car could reduce the cost of battery production and increase its range, according to a Reuters report. Apple Play declined to comment.
While Apple’s Pal cars may be years away, other companies are already building a significant number of EVs. But Kalesnik believes investors do not fully appreciate the competition in the EV market.
“Tesla’s EV market has some advantages and many of its competitors accept it,” Kalesnik said. “That said, its competitors have significantly larger cap costs. They’re putting up [together] Very aggressive, the millionaire plans to enter the dollar market. Volkswagen is already in production. Toyota has serious plans and has recently come out with its advances in solid state batteries, which are believed to revolutionize the EV industry. “
Despite his concerns, Kalesnik said he would not recommend a reduction in Tesla’s stock. “A bullish market for Tesla can curb your appetite for capital and shorts.” “But given the instability, you can burn very significantly.”
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