If You're Long Tesla, Now Is The Time To Exit
Tesla Motors Inc (NASDAQ: TSLA) is one of the Street's most debated stocks. On the one hand, Trip Chowdhry of Global Equities Research thinks Tesla's stock is worth $385 as the company is strategically positioned to dominate the upcoming $1 trillion "TaaS" Industry.
On the other hand, Michael Lingenheld, managing editor of Cup & Handle Macro, has "given up" trying to understand why Tesla's stock trades at the levels it does.
"At $250 per share it doesn't even have a P/E multiple because it's unprofitable, and constantly fails to meet delivery targets," Lingenheld argued in a research note. "In Tesla's second quarter earnings announcement, CEO Elon Musk acknowledged they might not hit the previous goal of delivering 55,000 vehicles this year – yet again."
Lingenheld continued that this was "not a shock" and Tesla's stock dropped 8 percent – only to rebound and trade above its pre-earnings level, despite a fresh share issuance. He attributed the rebound to a report by Morgan Stanley analyst Adam Jonas who placed a $465 price target on Tesla, which would value it at $60 billion, or "more than $1 million for each electrical car it will produce this year."
"Why these analysts can make such arbitrary predictions and have the market react to them is beyond me and it reeks of Mary Meeker in 2001," Lingenheld argued. "It seems futile to short Tesla because it trades on hype but, if you're long, now is the time to exit."
Bottom line, Lingenheld did acknowledge that Tesla is "one of the more amazing" companies in existence today. As such, he said the stock could "easily" hit $465 "at some point," but there will likely be "major turbulence" along the way.
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