Investment researcher and New Constructs CEO David Trainer told the CNBC show “Trading Nation” on Sept. 3 that the Telsa shares — which have risen 400% this year — are overpriced even if the auto company meets its lofty goals:
Whatever best-case scenario you want to paint for what Tesla’s going to do – whether they’re going to produce 30 million cars within the next 10 years, and get in the insurance business and have the same high margins as Toyota, the most efficient car company with scale of all-time – even if you do believe all that is true, the stock price is still implying that profits are going to be even bigger than that.
We think this is a big, big – one of the biggest of all time – houses of cards that’s getting ready to fold.
Trainer also sounded an alarm for people considering to buy Tesla after its stock split on Aug. 31:
Stock splits are inconsequential to value. They’re not changing the size, they’re just dividing it up into more pieces. Honestly, I look at the stock split as a way to lure more unsuspecting, less sophisticated traders into just trying to chase this stock up and that is not a real strategy.
Trainer also said Tesla shares are actually worth a tenth of their current price:
I think around a 10th of what it is is probably appropriate if you look at, you know, kind of a reasonable level of profits. Tesla doesn’t rank in the top 10 in market share or car sales in Europe for EVs and that’s because the laws changed in Europe that have strongly incentivized the incumbent manufacturers to crank up hybrids and electric vehicles. The same is coming in the United States. I think realistically we’re talking about something closer to $50, not $500, as a real value.