Benzinga - by Shanthi Rexaline, Benzinga Editor.
Tesla, Inc. (NASDAQ:TSLA) shares saw a bounce last Thursday after CEO Elon Musk hinted at shareholders’ overwhelming support for his 2018 compensation plan. However, the shares pulled back sharply on Friday after the approval was officially confirmed. A bearish analyst delved into the investment worthiness of the stock in an interview aired last week.
Hugely Dangerous: “Tesla is the biggest stock market bubble in world history and we have just seen the start of it,” said Per Lekander, Clean Energy Transition’s CEO and portfolio manager, in an interview with Yahoo Finance. He said Tesla’s models are outdated, the valuation is insane and earnings are plummeting.
The Tesla bear said he estimates earnings to fall 50% this year. The consensus estimate for 2024 has dropped from $5 at the start of the year to $2.65, he noted, adding that he estimates $1.40 per share. The analyst has a $15 price target for Tesla.
Lekander also flagged other risks, such as class action lawsuits and questions regarding the Tesla board paying itself enormous money.
“I think this is hugely dangerous, and in the end, it’s going to prove to be the next Enron,” he added.
The Enron parallel was previously used by Dustin Moskovitz, co-founder of Facebook (now Meta), who expressed uneasiness over cooked-up data regarding full self-driving capabilities. The infamous Enron saga stemmed from the company inflating its financial performance and hiding billions in debt with complex financial instruments. This eventually led to one of the biggest corporate scandals in U.S. history.
Retail Prop: Lekander said that retail traders are holding up the stock right now. While the broader market is up about 20%-25%, Tesla has fallen about 60% this year and the downward spiral is materializing step by step, he said.
“The retail crowd needs to to give up because that is what’s holding up this stock [which] in evaluation makes absolutely no sense,” the analyst said, adding he sees the stock going down further due to downward pressure on the bottom line, given the cyclical impact of the company’s price cuts.
Lekander said the first quarter had terrible deliveries but not bad earnings. In the second quarter, the company did everything to boost car sales, including offering financing at nearly 0% interest. He also raised the specter of the company making a loss in the second quarter and potentially in the third quarter.
“I think many fanboys will run for the hills,” he said.
Tesla ended Friday’s session down 2.44% at $178.01, according to Benzinga Pro data.
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