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- Tesla’s shares are overvalued, David Trainor told New Constructions CEO to CNBC’s “Trading Nation” on Monday.
- He said: “We think it’s a big, big – one of the biggest of all time – card houses that are getting ready to fold.”
- Tesla’s share price is about 800% in the last year alone.
- For Tesla, it was a volatile week last week, with several events leading to a broader tech-selling close, and its largest shareholder trimming its stake.
- For more stories visit the Business Insider homepage.
A Wall Street strategist says Tesla’s explosive share-price growth has made the luxury electric vehicle manufacturer one of the hottest tech stories of the year, but its stock levels are “home of the cards”.
This is according to David Trainer, CEO of investment research firm New Constructions.
He told CNBC’s “Trading Nation” last week: “We think it’s a big, big – one of the biggest of all time – card houses that are getting ready to fold.”
“Whatever the best scenario you want to see for Tesla to do – whether they’re going to produce 30 million cars within the next 10 years, and be in the insurance business and have the same high margins as Toyota, the most. Efficient car company with all time scales, ”he said. “Even if you believe all this to be true, the share price still looks like the profits are going to be even bigger.”
Trainer said the current average selling price is $ 57,000 and that 10.9 million cars are sold by 2030, with Tesla having a market share of only 42%.
Tesla’s stock is up nearly 800% over the past year and trades at an estimated 159 times forward earnings. Its shares in Frankfurt were trading around 4% for the day at 327.45 euros ($ 387.54). US exchanges are closed on Monday for Labor Day holiday.
Last week proved to be a volatile week for the company.
Read more: Bank of America reflects under-radar indicators that the stock market is largely ‘running on smoke’ – and may just begin warning of the September recession
The stock recorded a 7% decline on Friday, marking a fourth-day decline, with a 9% drop on Thursday, with all major Wall Street indices down.
The company’s shares were down 6% on Wednesday, after the company’s largest shareholder, Bailey Gifford, said that its stake in the company was reduced due to internal regulations of the company reducing the weight of single stock in the client portfolio. Was trimmed.
Trainer said Tesla’s stock splits that took place last week are dangerous for new investors who come into the stock.
“To be honest, I see stock splitting as a way of more unheard of, less sophisticated traders trying to chase this stock and it’s not a real strategy,” he said.
Read more: ‘Never been so extreme’: A well-known stock bear says today’s ‘hypervalued’ market means the worst market returns in history – and a 66% crash is expected from today’s levels
While Trainer praised Tesla’s CEO, Elon Musk, for turning electric vehicles into more mainstream vehicles, the company’s weak fundamentals meant he would not touch the stock.
Trainer said: “Tesla does not rank in the top 10 in market share, or car sales, for EVs in Europe and that is because laws have changed in Europe that have allowed hybrid manufacturers to crank out hybrid and electric vehicles Is strongly encouraged to do. “
He said, “The same thing is coming to the United States as well. I think we are talking about $ 50 in real terms, not $ 500 as the actual value.”
The S&P 500 added three names to its index this month, but did not add Tesla, even though it was widely expected that the world’s most valuable carmaker would make the cut.