Trainer explained, “Whatever best-case scenario you want to paint for what Tesla’s going to do— whether they’re going to produce 30 million cars within the next 10 years, and get in the insurance business and have the same high margins as Toyota, the most efficient car company with the scale of all-time – even if you do believe all that is true, the stock price is still implying that profits are going to be even bigger than that.”
Additionally, he added that the automaker’s recent stock split is “inconsequential to value.” He sees it as “way lure more unsuspecting, less sophisticated traders into just trying to chase this stock up and that is not a real strategy.”
Furthermore, Trainer believes that Tesla’s real valuation is significantly lower than its current level. According to him, “I think around a 10th of what it is probably appropriate” based on “reasonable level of profits,”
“Tesla doesn’t rank in the top 10 in market share or car sales in Europe for EVs and that’s because the laws changed in Europe that have strongly incentivized the incumbent manufacturers to crank up hybrids and electric vehicles. The same is coming to the United States. I think realistically we’re talking about something closer to $50, not $500, as a real value,” he said.
