Electric vehicle (EV) manufacturer Tesla may have been on the rise with its meteoric development in recent years but one analyst says that the company’s stocks fundamentals cannot support such growth.
According to a report by Keris Lahiff on CNBC, David Trainer of New Constructs dubs Tesla as ‘the most dangerous stock on Wall Street’.
Likening the EV company’s stocks as a big house of cards ready to fold, Trainer compared the company’s status with one of the world’s most stable and largest auto manufacturing companies – Japanese giant Toyota. He declared that Toyota is one of the most efficient car companies of all time and soon after discusses how Tesla’s current market share in the EV market is not proportional to its current valuation.
He deduced that the current stock price is anywhere from 40% to 110% share of the market based upon the average selling price of a unit. In an estimation, he forwarded to the same report, with the company’s current average price per unit of $57,000, and if we presume that the company will be able to capture 42% of the market share by 2030, the company still “trades at 159 times forward earnings”.
The Trainer also raised his concerns regarding the company’s recent stock split scheme, which according to him is dangerous for non-professional and new investors who plan to put their money in the stocks boards. He shared that the move is “inconsequential” for it doesn’t change its size and just subdivides it into smaller sizes. He warned that it might be a step to lure in newbie investors to the company’s stock adding that it is not “a real strategy”.
Furthermore, he suggested that the company’s real value currently is “something closer to $50” and not $500.
As of press time, representatives from Tesla have denied giving any comments on the matter with regards to the CNBC report.