So far this year, tesla (TSLA-US) shares have continued to rise and are about to be included in the S&P 500 index. However, David Trainer, senior equity analyst at investment research firm New Constructs, said on Thursday (18) that including Tesla in the S&P 500 would spell trouble for investors and that Tesla should only be worth $172.
Trainer said in the report that Tesla’s inclusion in the S&P 500 marks a new peak in the frivolity of today’s investment environment and will be a catalyst for Tesla’s valuation to converge with the company’s poor fundamentals.
Like the Big Morgan analysts, Trainer believes Tesla’s shares are overvalued, and that the company’s 716% stock price gain this year could signal an impending crash. trainer believes Tesla’s shares should be priced at $172 per share, 73% below current levels. Big Morgan analysts, on the other hand, have set a $90 price target for Tesla’s shares.
Trainer also said that including Tesla in the S&P 500 would create unnecessary risk for investors who have money to passively track the index. He believes that while Tesla’s stock price may rise more once it is included on the 21st, the boost will be short-lived.
Trainer’s concerns about Tesla include increased competition in the electric car market, consumer doubts about quality and falling demand in Europe.
In the third quarter of the year, Tesla delivered a record 139,300 vehicles, but Trainer noted that Tesla’s share of the European electric vehicle market has fallen from 34 percent in the third quarter of 2019 to 14 percent in the third quarter of this year.
Trainer also said that in China, the best-selling EV is the Hongguang MINI, produced by GM’s joint venture with the local company, which is 11 percent cheaper than the Model 3, and that GM’s commitment to invest billions of dollars in EV production already poses a threat to Tesla. trainer also noted that Tesla ranked in Consumer Reports’ annual vehicle reliability study second to last.
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