Tesla Stock Is Only Worth This Much, Analysts Insist

Elon Musk just pitched investors on why Tesla’s future is bright. But analysts disagree — calling the sixth most valuable stock in the S&P 500 among the very most overvalued.


Tesla is the third most overvalued stock in the S&P 500, analysts say, just after materials company Amcor (AMC) and industrial firm Robert Half (RHI), according to an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. The stock, which closed at 793.61 on Thursday, is rated a “hold” by analysts, on average.

To be precise, analysts think Tesla stock is more than 13% overvalued and should only be a 688.99-a-share stock in 12 months. That’s a shock for investors who pushed shares up nearly 13% just this year — and nearly 1,500% in the past three years. In comparison, the S&P 500 is up 17% this year, but only 52% in the past three.

And the Tesla stock debate will heat up on Friday, the first day of trading following the company’s shareholder meeting.

Tesla Stock Hate Unusual In The S&P 500

Calling an S&P 500 stock more than 10% overvalued is highly unusual. Analysts just don’t do that often. The numbers show you just how rare it is.

Analysts only think 40 S&P 500 stocks, or less than 10% of the index, are overvalued. And of those, it’s almost unheard of to say they’re 10% too expensive. In fact, analysts think the 40 overvalued companies, on average, are only 4% overvalued. And they think that half of the overvalued S&P 500 stocks are just 3% too pricey.

And that’s where analysts’ skepticism of Tesla is so unusual. The pessimistic 688.99 12-month price target on Tesla is the product of more than 30 analysts, says S&P Global Market Intelligence. And it’s actually down roughly 3% from their price target of 709.44 in late April.

But part of the story is the massive spread between the believers and nonbelievers. The median 12-month price target, 755.00, on Tesla stock is higher than the average. The highest price target calls for shares to trade at 1,200, while the lowest is at 150. But even the more charitable median Tesla price target implies the stock is more than 6% overvalued. That’s much higher than average within the S&P 500.

And the stakes are huge. Tesla commands a market value of nearly $800 billion. Just this one consumer discretionary company accounts for nearly 2% of the S&P 500. Should you buy Tesla stock now?

Some S&P 500 Analysts Break Rank

Not all Tesla analysts are so bearish. Some are offering support.

Just this week, CFRA analyst Garrett Nelson boosted his price target on Tesla by more than 11% to 750 a share. But that’s still 5% lower than Thursday’s close. Nelson also upped his adjusted earnings-per-share estimate for fiscal 2021 by more than 7% to $5.30. S&P 500 analysts at large think Tesla will make $5.44 a share, up more than 140% from 2020.

“We remain at a Hold on valuation and due to concerns related to increasing EV competition and uncertainties related to the infrastructure bill and future tax credits, as various lawmakers increasingly withdraw their prior support for the infrastructure bill,” he said.

Wedbush’s Dan Ives, though, is much more positive. He’s calling for Tesla stock to rally more than 26% until hitting his 12-month price target of 1,000 a share. But he makes it clear that’s a long-term call.

“We maintain our outperform rating and 1,000 price target as Tesla remains our favorite way to play the green tidal wave and a $5 trillion EV market over the next decade,” he said.

Tesla: Among The Most Overvalued S&P 500 Stocks, Say Analysts

Company Ticker YTD % change on stock Target price (12 months) % overvalued Sector
Amcor (AMC) 5.1% 12.88 20.1% Materials
Robert Half International (RHI) 71.5% 92.55 13.6% Industrials
Tesla (TSLA) 12.5% 688.99 13.2% Consumer Discretionary
Paycom Software (PAYC) 13.1% 457.77 10.5% Information Technology
Ceridian HCM Holding (CDAY) 11.2% 108.40 8.5% Information Technology
Lumen Technologies (LUMN) 31.2% 11.80 7.7% Communication Services
Old Dominion Freight Line (ODFL) 50.5% 274.73 6.5% Industrials
Oneok (OKE) 58.3% 57.48 5.4% Energy
Netflix (NFLX) 16.9% 599.23 5.2% Communication Services
Live Nation Entertainment (LYV) 34.7% 93.92 5.1% Communication Services
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz


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