Tesla, An ‘Overvalued Bubble’? Retail Watchers Grow More Nervous As EV Stock Zooms Past $470

Shares of Tesla, Inc. surged over 3% on Tuesday morning, reaching a new record high of over $470, on track to extend their third consecutive session in the green. 

The rally comes amid growing analyst optimism, fueled by the belief that Tesla will benefit from Elon Musk’s increased political influence with President-elect Donald Trump’s administration.

Following Wedbush Securities’ price target hike to $515, Mizuho also upgraded Tesla to Outperform from Neutral, with the very same price target, up from a prior $230. 

Mizuho believes Tesla’s autonomy software stack is improving and sees a loosening regulatory framework that could benefit the company. 

Additionally, the brokerage argues that new policies under the Trump administration could position Tesla more favorably with a lower cost structure than its competitors.

However, concerns have emerged regarding the broader political landscape. Trump’s transition team has recommended cutting EV support and imposing stricter measures on imports from China, a move that could impact the EV market. 

Still, many analysts remain confident that Tesla is immune to policy changes and will continue to thrive.

Truist has raised its price target on Tesla to $360, up from $238, while maintaining a ‘Hold’ rating. 

The brokerage expressed cautious optimism about the stock’s recent rally, noting that most of the gains appear tied to Musk’s increased favor with Trump, rather than strong company fundamentals or earnings outlook. 

TSLA poll, sentiment and message meter Dec 17 as of 11:00 am ET | source: Stocktwits

However, retail sentiment for Tesla on Stocktwits has turned ‘extremely bearish’ compared to the ‘bullish’ sentiment observed last month in the aftermath of the election results.

A poll on the platform revealed that 61% of retail investors believe Tesla is an “overvalued bubble” with the stock above the $460 mark, while 19% still consider it undervalued.

Some skeptics drew comparisons to Nvidia’s stock, which saw a significant decline earlier this year.

Another predicted the stock retracing to the $350 level.

Tesla is trading at a trailing price-to-earnings (P/E) ratio of 131 and a forward P/E multiple of 153, raising concerns about its sustainability. 

Goldman Sachs has predicted flat deliveries for Tesla this year. 

Despite these concerns, Tesla’s stock has gained over 90% this year and is currently trading 40% higher than the average price target from analysts.

Tesla’s long-term plans, including a lower-cost EV model and the launch of a robotaxi service in 2025, continue to fuel optimism among some investors. 

However, the stock’s current rally faces mounting skepticism from retail investors, underscoring the divergence from Wall Street’s overwhelmingly positive outlook.

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