Tesla (NASDAQ:TSLA) stock could be worth “just $85” per share due to falling margins, according to a Roth Capital analyst.
Craig Irwin, Roth’s Cleantech analyst, called Tesla stock “egregiously overvalued” and suggested investors look to other car companies for gains.
Tesla was due to open this morning, June 20, at about $279 per share, its market capitalization falling below $900 billion. It is still up about 160% so far in 2023.
TSLA Stock: Bear vs. Bull
Tesla reported GAAP earnings of $2.7 billion, 78 cents per share, on revenue of $24.9 billion for the June quarter. Income was up 20%, but revenue was up 47%.
The trend concerns bearish analysts, who worry that the electric car market is becoming more competitive. Operating earnings of just 9.6% were especially concerning. So was the earnings call, where the company offered no firm date on deliveries for its Cybertruck or robot taxi. Musk also predicted slower sales for the third quarter due to scheduled factory shutdowns.
Many bears want CEO Elon Musk to focus more on the car company and less on interests like Twitter. They seem especially concerned with BYD (OTCMKTS:BYDDF), the Chinese mid-market electric car company that delivered over 350,000 electric cars during the quarter, gaining on Tesla’s 466,000 deliveries.
Traditional car companies, like Ford Motor (NYSE:F), are also ramping up production and cutting prices on their electrics. Ford’s Lightning pick-up prices were recently cut by 17%. Bears worry that the market for luxury electric vehicles may soon be saturated.
Bulls, however, remain unconvinced. Dan Ives of Wedbush called it a “goldilocks quarter” and insisted Tesla management is “playing chess while others are playing checkers.” The average analyst rating on the stock is now a “hold.”
What Happens Next?
The biggest problem with TSLA stock is that it has now been priced to perfection. Most car companies sell at a discount to sales. Tesla is selling for nine times 2023 sales and 85 times earnings. A certain amount of profit-taking seems in order.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
