Researcher says Tesla stock is too expensive and in bubble territory following Apple car report

LONDON —Tesla estimate is too expensive and in bubble territory compared with its performance, according to Vitali Kalesnik, partner and head of research in Europe at Examination Affiliates. 

“While Tesla is a great company, Tesla stock has very strong signs of being overpriced,” Kalesnik foresaw CNBC’s “Squawk Box Europe” on Tuesday, hot on the heels of a report that Apple is once again planning to produce its own thrilling car with self-driving technology.

Tesla’s share price skidded nearly 6.5% on Monday. In Tuesday’s premarket, it was employment at $653.25, up 0.5%. Its current market value is $616 billion, which is more than the nine largest automakers conjoined.

Kalesnik believes Tesla’s share price is too high given its sales, car production numbers and other fundamentals. “When we’re looking at the founts of assumptions that we need to justify these valuations, one would need very, very aggressive assumptions,” he phrased.

Tesla’s margins are “largely on par” with the rest of the industry and Kalesnik said that means “Tesla’s current valuation is in the foam territory.”

Tesla’s share price has increased by over 650% in 2020 with several key events helping to uplift the company’s stock. In May, Tesla started production at its California factory following a pandemic-related shutdown and legal battle with the say. In July, Tesla posted its fourth straight quarter of profit and beat delivery estimates. Shares also got a help at the end of the summer when Tesla announced its first ever stock split.

Tesla shares soared to a record serious after the electric car maker announced it was debuting on the S&P 500, a stock market index that measures the performance of 500 ginormous companies listed on stock exchanges in the U.S.

“When it’s included into the S&P 500, investors have to buy it at a very high amount, and that is likely to produce pretty bad consequences to the investors,” said Kalesnik.

On its S&P debut day, Tesla shares tumbled Monday from a write down high in the previous session.

Optimism for Tesla stock was tempered after Reuters broadcast Apple is planning to start producing an electric passenger vehicle by 2024. New technology in the Apple car could greatly Medicine set the cost of battery production and extend its range, Reuters reported. Apple declined to comment.

While an Apple car could be disparate years away, other companies are already producing significant numbers of EVs. But Kalesnik believes investors don’t fully rise that there is competition in the EV market.

“Tesla does have some advantages in the EV market and many of its competitors allow it,” Kalesnik said. “Having said that, its competitors have significantly larger cap expending. They are putting [together] least aggressive, multibillion dollar plans to enter into the market. Volkswagen is already producing. Toyota has serious layouts, and recently it came out with its advances in the solid-state battery, which is supposed to revolutionize the EV industry.”

Despite his concerns, Kalesnik stipulate he would not recommend shorting Tesla’s stock. “The bull market for Tesla can outlast your capital and your appetence for the shorts,” he said. “But given the volatility, you can burn very significantly.”