For Tesla stock, there seemed to have been only one path in the past few months – steeply uphill. Since the beginning of the year, Tesla has more than quintupled its value on the stock exchange. Most recently, after the announcement and the implementation of the share split, there was a fireworks display. Only last week’s performance was disappointing. Profit-taking and a general slump in tech stocks drove down five percent. The right time to jump on the line of success now? An expert warns.
Trainer: Tesla shares are heavily overvalued
On CNBC’s Trading Nation program, investment researcher and New Constructs boss David Trainer said he believed Tesla stock was grossly overvalued. Even if the best-case scenario always occurs at Tesla in the coming years – for example in terms of the number of electric cars produced and sold, the profit margin or the conquest of new business areas – profits should still be significantly higher.
Tesla’s rating is currently 159 times higher than profits would allow, according to Trainer. Based on the share price, Tesla should have a market share of 40 to 110 percent, assuming the current average sales price of 57,000 US dollars. Tesla is currently one of the largest houses of cards that is ready to collapse, said coach, according to CNBC .
The recent stock split could prove to be an additional threat to potential investors. For trainers, the step of splitting Tesla shares into five parts is an attempt to get inexperienced stock traders to buy. It is clear that the entry barrier for buying paper with a share split – as Apple had carried out at the same time – is falling. Before the share split at the end of August, you had to pay more than $ 2,200 for a Tesla paper, after which it was $ 460. On Friday, Tesla shares traded at $ 418.
Tesla stock should cost more like $ 40 to $ 50
According to Trainer, a realistic valuation would place Tesla stock in the $ 40 to $ 50 range. According to the investment researcher, Tesla is not in the top 10 on the electric car market in Europe. The stricter laws in terms of CO2 emissions would have caused the traditional car manufacturers to catch up when it comes to pure electric and hybrid vehicles. In the US, similar requirements can be expected in the long term. Trainer paid tribute to Tesla and its CEO Elon Musk for their pioneering role in the electric car sector. But a look at the fundamental data ensures that he keeps his hands off the stock.