Citi analyst Itay Michaeli said Tesla stock is in an inflated state and could plunge more than 50 percent in the future. The analysts reiterated a sell rating on Tesla stock with a $424 price target in a report. Currently, Tesla stock is trading at about $923 per share.
Tesla stock price
This bold analysis is largely based on skepticism about Tesla’s Autopilot technology, which according to data released by the National Highway Traffic Safety Administration (NHTSA) shows that from June 2021 to May 15, 2022, there were 273 accidents involving Tesla Autopilot, accounting for nearly 70% of the 392 accidents involving the advanced assisted driving system. In addition, the analyst believes that Tesla’s stock has a forward P/E ratio of 76 times, which does not take into account the intensification of the economic slowdown.
He writes in the report, “We believe current valuations remain challenging, with a handful of other companies that have previously reached Tesla’s current market cap reaching an average of ~$100 billion in gross profit, compared to Tesla’s estimated annualized ~$30 billion in the second half of 2022 ($20 billion in the first half). And in the context of the current macro situation, it’s important to note that Tesla is expanding production capacity for the Model Y, a car that sells for about $60,000 in the U.S. market, yet the U.S. market is already relatively small and other electric vehicles are increasing.”
Meanwhile, Tesla came up with strong arguments to justify the current valuation of its stock: sales in the second quarter rose 43 percent year over year to $14.6 billion. Operating profit jumped 88 percent year-over-year to $2.5 billion.
