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Stock Market Analysis

Are Tesla Shares Only Worth $150?

The EV maker just reported strong sales numbers for the first quarter, so why is a Roth Capital analyst bearish on Tesla stock? 

Craig Irwin, senior analyst at Roth Capital, said that Tesla (NASDAQ: TSLA) shares are extremely overvalued and stated that the stock is only worth $150 — a 78% discount on the stock’s current share price of $691, which Irwin says is currently unjustified. 

Tesla reports strong deliveries 

Despite the bearish report, Tesla shares closed at $691 last night, up 4.4%, after the company reported its Q1 delivery numbers which blew past analyst expectations of 168,000 vehicles, with Tesla stating that it delivered 184,800 and produced 180,338 cars. The strong sales figures have convinced some analysts that Tesla could now exceed 850,000 deliveries for 2021. 

Despite the EV manufacturer facing chip shortages, the forecast-beating delivery numbers came as a much-needed boost for Tesla shareholders after the company’s recent negative reports.

However, Irwin stated that the likelihood of Tesla smashing estimates for the first quarter was “clearly already in valuation.” He added that the California-based company’s market cap of $663 billion is nearly equivalent to the entire size of the U.S. and European auto markets, despite Tesla being a relatively small player in the space: 

“So for me, I see this as a market dislocation, I see this as something avoiding analysis of the fundamentals and I think there’s room for many successful companies in the market. People are just assuming that Tesla has no competition when they put this kind of lofty valuation on the company.” 

For the company to meet its current valuation, Irwin says that Tesla would need to deliver on its robotaxi plans, fully autonomous cars, and make a strong entry into the Indian market. In addition, heightened competition in the EV market is still a concern for shareholders and may be another contributing factor for the bearish call from Roth Capital. 

Why is Tesla stock so volatile? 

Tesla has always been a volatile stock but recently the company has faced a number of harsh challenges which has affected its share price, including: 

  • Three separate mass recalls in 2021 so far. 
  • A number of federal investigations into its autopilot feature as well as Elon Musk’s Twitter behavior over market manipulation concerns. 
  • Competition in the EV market has ramped up from Mercedes, Volkswagen, Ford, and GM.
  • Bans on its vehicles have begun in China.

Read more about Tesla below:

Following Months Of Volatility, Is It Time To Sell My Tesla Shares?

Can Tesla Become A Trillion-Dollar Company?

Could Tesla Produce 100K Cybertruck’s By 2025?

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.

Nicole Byrne
Nicole Byrne
Nicole is a writer here at MyWallSt. Her favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.