Economy

Researcher says Tesla is stockpiling the bubble area amid rumors of Apple cars

Tesla Motors CEO Elon Musk poses during a TV interview following his company’s initial public offering on the NASDAQ market in New York, June 29, 2010.

Brendan McDermid | Reuters

London – Tesla shares are more expensive and are in bubble territory compared to their performance, says Vitaly Kalisnik, Partner and Head of Research for Europe at Research Affiliates.

“While Tesla is a great company, Tesla shares have very strong signs that they are overpriced,” Kalysnik told CNBC’s “Squawk Box” program on Tuesday. A report says that Apple is once again planning to produce its own electric vehicle With autonomous driving technology.

Tesla’s stock price before the market opening on Tuesday was $ 649.86 and the company is currently valued at $ 616 billion, which is more than the nine largest automakers combined.

Kalesnik thinks Tesla’s current stock price is too high given sales, car production numbers, and other fundamentals. “When we look at the kinds of assumptions we need to justify these assessments, one needs to make very aggressive assumptions,” he said.

Tesla’s margins are “broadly equal” to the rest of the industry, and Kalysnik said this means that “Tesla’s current valuation is in the bubble area.”

Tesla’s stock price soared by more than 650% in 2020 with several key events helping to lift the company’s shares. In May, Tesla Production began In Gigafactory California after the epidemic-related closure and Legal battle with the state. In July, Tesla It posted profits for the fourth consecutive quarter And beat the delivery estimates. Stocks also got a boost at the end of the summer when Tesla announced its first-ever appearance Stock split.

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Tesla arrow To a record level After the electric car maker announced that it made its debut in the S&P 500, a stock market index that measures the performance of the 500 large companies listed on U.S. stock exchanges

“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 dire consequences for investors,” Kalysnik said.

Tesla arrow It backed off on Monday It also made its debut in the S&P 500 and the stock closed 6.5% down from a record high in the previous session.

Competition from Apple?

Optimism about Tesla’s stock eased after Reuters reported that Apple plans to start producing an electric passenger car by 2024. Reuters reported that the new technology in Apple’s car could significantly reduce the cost of producing batteries and expand their range. Apple declined to comment.

Although Apple’s car may be several years away, there are other companies already producing large numbers of electric vehicles. But Kalysnik believes that investors do not fully appreciate the existence of competition in the electric vehicle market.

“Tesla has some advantages in the electric vehicle market and is recognized by many of its competitors,” Kalysnik said. Having said that, its competitors have a much larger spending ceiling [together] Very aggressive multi-billion dollar plans to enter the market. Volkswagen is already producing. Toyota has serious plans and recently came out with its developments in solid-state battery, which is supposed to revolutionize the electric vehicle industry. “

Despite his concerns, Kalisnik said he would not recommend short selling Tesla shares. “Tesla’s bull market can outlast your capital and your appetite for short purchases,” he said. “But given the ups and downs, you can get pretty burned.”

Thelma Binder

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