Tesla (NASDAQ: TSLA) shares have had a bit of a rough go of it since January.
Since closing at $883 on January, 26, the stock has dropped more than 22% and has been stuck in a consolidation pattern since last month.
Still, the stock is up nearly 550% over the last 12 months, and one analyst says Tesla is overvalued and really only worth $150 – 78% below the stock’s price as of this writing.
Roth Capital senior research analyst Craig Irwin said this week that Tesla needs to do more to justify its valuation than just report better-than-expected deliveries, which it did last week. The electric automaker reported 185,000 vehicle deliveries for the first quarter of 2021, while analysts had projected a reading of between 160,000 and 170,000.
Irwin argues that Tesla’s ability to beat estimates is “clearly already in valuation,” which has swelled to around $663 billion or close to the total size of the U.S. and European automotive markets despite the fact that Tesla is only a “minor player” overall in the industry.
“I see this as a market dislocation, I see this as something avoiding analysis of the fundamentals and I think there’s room for many successful companies in the market,” Irwin said. “People are just assuming that Tesla has no competition when they put this kind of lofty valuation on the company.”
Morgan Stanley analyst Adam Jonas has a decidedly different view on Tesla shares.
Citing the Biden administration’s proposal to allocate $174 billion to develop the nation’s electric-vehicle ecosystem as part of his $2.25 trillion infrastructure plan, Jonas said in a note this week that “auto investors face greater risk not owning Tesla shares in their portfolio than owning Tesla shares in their portfolio.”
Jonas has a Buy-equivalent rating on Tesla, with a price target of $880 – nearly 29% above the stock’s price as of this writing.