Moas Is Bearish on TSLA Stock
Barely a week passes without Tesla Motors Inc (NASDAQ:TSLA) attracting another high-profile enemy. One of the earliest calls against TSLA stock was by Ronnie Moas from Standpoint Research, Inc. He says the stock is way overvalued.
Moas didn’t pay all that much attention to Tesla in 2014 or 2015, but he says the recent spike in TSLA stock caught his eye. After bottoming around $143.67 in February, the share price has appreciated 55.24%. (Source: “Ronnie Moas bearish on Tesla,” Yahoo! Finance, April 8, 2016.)
“I think the valuation on Tesla is completely disconnected from what my analysis is showing me,” he said. “There are a lot of better places in the stock market to put your money than Tesla right now.” (Source: Ibid.)
Roas has a devastating argument against holding Tesla stock. He points out that the company has a market cap bigger than Mazda, Fiat, Ferrari, and Porsche combined. Think about that: the market prices Tesla above four major automakers even though it has never turned a profit.
Roas also pointed to Tesla’s sky-high price-to-earnings (P/E) multiple as a sign of impending doom.
“When analysts are telling me [Tesla] may earn $6.00 a share in 2018, I’m very sceptical,” he said. “That’s 45 times a speculative estimate for 2018 [wheras] GM and Ford are at six-times, okay, so I prefer the risk-reward there.” (Source: Ibid.)
Roas isn’t the only one to point this out. A lot of analysts have turned on Tesla recently, arguing that the company is littered with problems investors are simply ignoring.
For instance, Tesla has repeatedly raised capital to finance its expansion, yet it has never delivered a positive return-on-equity. It promised to build 500,000 cars in 2018, yet it has struggled to meet much lower production estimates. Those are serious problems.
Roas put a $180.00 price target on Tesla stock, arguing that its surge was only temporary.
“A lot of the recent buying was fueled by short covering,” he said. “If you look at the last time the market collapsed in January, Tesla went down to $150.00 a share when the high P/E names went out of favour.” (Source: Ibid.)