The Tesla share price has more than doubled since the beginning of the year because the electric car manufacturer was able to successfully boost demand and more and more car manufacturers want to adopt its charging network standard. However, one analyst believes the recent upside has been far too big and Tesla stock is now “outrageously overvalued.”
• Tesla stock on a strong run in 2023
• ROTH Capital Partners analyst admits e-car maker “some real wins”.
• Expert still bearish – Tesla stock will “go down again just as quickly”
The performance of Tesla shares since the start of the year has been impressive: the share has gained around 127 percent in value so far in 2023 and was last at 279.82 US dollars (as of the closing price on July 3, 2023). Craig Irwin, an analyst at the private investment bank ROTH Capital Partners, also admitted in an interview with “Yahoo Finance” that Tesla shares have “performed incredibly well” this year. “They’ve had some real wins and the rating has gone up like a kite,” said the pundit. He referred in particular to the price cuts, which would have successfully revived buyers’ enthusiasm for Tesla vehicles – as also shown by the delivery figures for the second quarter – and the adoption of the Tesla charging network standard by numerous other large car manufacturers. Nevertheless, he believes that the price movement has been too large and that Tesla shares are now massively overvalued.
These points worry the expert at Tesla
“When I look at Tesla, I would say it’s outrageously overvalued,” Irwin told Yahoo Finance. In the interview, the analyst also listed a few points that worried him about the electric car manufacturer. With regard to buyers, the past few months have shown above all that demand is weak and “very price-sensitive”. For this reason, Tesla also had to aggressively lower prices so that customers would jump on it. “If there are big price changes, they react,” said the expert. In the future, however, Tesla is likely to be confronted with increasing competition from large car manufacturers who are Elon Musk will make life difficult. For example, Ford and General Motors would “come out with pretty compelling vehicles” that could effectively compete with Tesla. Irwin therefore expects that it will be much more difficult for Tesla to maintain the previous margins and growth rate in the future.
In addition, retail investors would also be overly enthusiastic about the potential impact of artificial intelligence (AI) on Tesla’s self-driving capabilities. “The big institutions all know that the importance of AI for Tesla is relatively moderate,” said the ROTH Capital analyst. “The winning ways of this AI are [im Bereich autonomes Fahren] much more limited in my opinion for Tesla, at least for now,” added Irwin.
The expert also sees positive and negative sides in the agreements with other car companies on the use of Tesla’s charging network standard and the Supercharger network. On the one hand, Tesla will probably earn a lot with it, which is fantastic, but on the other hand, it could put a strain on the brand if Tesla drivers now have to wait much longer at the charging stations because they are more frequented and e-cars from other manufacturers need longer until theirs batteries are charged.
This is how the ROTH Capital analyst sees the future of Tesla shares
Tesla stock’s strong performance so far could prove to be a bull trap for the reasons given, according to Craig Irwin. He expects the stock to see “significant volatility” going forward, warning that it could fall as fast as it has risen. While Tesla is “a fantastic pioneer driving this industry forward” and has played a huge role in transforming transportation, the competition is just getting too big and too strong. He has therefore maintained his “long-term bearish stance,” according to the analyst.
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