In the midst of the AI-driven technology stock surge of 2023, Elon Musk’s Tesla Inc. (NASDAQ:TSLA) has been enjoying quite a ride. However, the company’s inflated valuation is raising eyebrows in some quarters.
The investment research firm New Constructs, led by its CEO David Trainer, proposes a startling analysis: according to them, the valuation of the electric vehicle behemoth is inflated by over 1,000%, as per a report by Business Insider.
Does the Emperor Have No Clothes?
In Trainer’s view, Tesla’s fundamentals have veered off from reality. He questions the electric car manufacturer’s “unspectacular” production statistics and its dwindling gross profit margin. To make its current stock price reasonable, Trainer suggests that Tesla would have to increase its return on invested capital to heights that even the world’s most profitable enterprises have not attained.
A Kaleidoscope of Opinions
While Trainer casts a shadow over Tesla’s fortunes, other analysts retain their faith. One such optimist is Dan Ives, the CEO of Wedbush, who likens Tesla’s situation to Apple’s in its earlier years when the tech giant’s stock price did not mirror its future earnings potential.
In Ives’ words, “This quarter represents a significant leap forward – Tesla is engaging in a strategic game of chess, while its competitors are still playing checkers.”