Tesla shares have gone on a wild ride over the past 12 months and according to at least one analyst, the electric automaker’s stock is overpriced.
The company’s shares have increased by over 650 per cent in 2020 and has been boosted by things like minor profits, a stock split, and Tesla’s inclusion in the S&P 500. As of Tuesday, Tesla shares were trading at $640, giving the company a market cap of over $600 billion, more than the nine largest automakers combined.
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“While Tesla is a great company, Tesla stock has very strong signs of being overpriced,” partner and head of research in Europe at Research Affiliates Vitali Kalesnik said in an interview with CNBC. “When we’re looking at the types of assumptions that we need to justify these valuations, one would need very, very aggressive assumptions. Tesla’s current valuation is in the bubble territory.”
Kalesnik also made mention of the potential electric vehicle being developed by Apple that according to a new report, could launch as early as 2024. News about this latest Apple project saw optimism for Tesla stock tempered while helping to increase the price of Apple shares. There are other car manufacturers that investors also need to consider before jumping on the Tesla bandwagon.
“Tesla does have some advantages in the EV market and many of its competitors admit it,” Kalesnik said. “Having said that, its competitors have significantly larger cap expending. They are putting [together] very aggressive, multibillion-dollar plans to enter into the market. Volkswagen is already producing. Toyota has serious plans, and recently it came out with its advances in the solid-state battery, which is supposed to revolutionize the EV industry.”