STLA - Tesla: Overvalued -- Plain And Simple

2024-07-18 11:25:16 ET

Summary

• Tesla, Inc. stock is overvalued due to speculative growth prospects and extreme multiples, facing challenges like increased competition and low margins.
• Tesla's margins and multiples are not justified compared to competitors, with high capital intensity hindering cash flows and limiting ability to return capital to shareholders.
• Tesla's technological advantage is diminishing, with underwhelming full self-driving capabilities and potential liability issues.

Investment Thesis:

After the recent Tesla, Inc. ( TSLA ) rally, I believe the stock has reached levels that represent a significant overvaluation, which leads me to issue a strong-sell rating. I believe there is little justification for buying or even holding this equity. Tesla stock is a strong sell for many reasons, the primary one being that the current valuation can only be supported as a result of speculative growth prospects such as robotaxis and extreme growth in their software and energy segments ....

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