There’s been a healthy buzz around Tesla, Inc. (NASDAQ:TSLA) these past few weeks, with plenty of positive nuggets pushing up the company’s share price close to a 2025 high.
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CEO Elon Musk’s $1 billion share purchase and a potential $1 trillion incentive package proposed by the board of directors certainly contributed to the bullish vibes, while hopes for Tesla’s full-self driving ambitions have some investors seeing mega dollar signs in the years to come.
While these news flashes reflect sentiment more than fundamentals, in the here and now there are also signs that the company’s upcoming Q3 2025 EV delivery numbers will surpass expectations.
All told, TSLA is up almost 70% for the past six months.
Should savvy investors follow this trend upwards? Not according to investor Johnny Zhang, who thinks the recent bull run is disconnected from the fundamentals.
“We should be careful not to confuse a bullish trend with the idea that TSLA is fundamentally strong. There is a big difference between expectation and speculation,” reminds the 5-star investor.
Addressing the hopeful anticipation of strong Q3 delivery numbers, Zhang is tamping down on all the excitement. He anticipates that the “positive surprise” will likely be due to pulled forward purchases thanks to the expiring $7,500 EV tax credit – and not representative of a “real growth inflection.”
Moreover, Zhang notes that Tesla’s U.S. market share has now dropped to its lowest point in almost a decade, as competition is heating up from both BYD and domestic brands.
But what about the AI-inspired gains up ahead? Here too, Zhang counsels caution. The investor points out that we don’t know when the AI disruptions will take place, nor do we know how significant they might be.
“A reasonable expectation should be centered on data, (and) at least one blockbuster quarter to validate this optimism,” emphasizes Zhang.
In addition, it’s safe to assume that a decent amount of the future growth is already priced it, as TSLA’s Forward Price-to-Earnings ratio of 250x is “extremely stretched.” Zhang cites analyst estimates predicting that this number is expected to come back down to earth, reaching 30x in 2030.
“I believe TSLA is in a huge bubble, with downside risk far greater than upside in the long term,” stresses Zhang, who rates TSLA a Strong Sell. (To watch Johnny Zhang’s track record, click here)
Wall Street is a mixed bag when it comes to TSLA. With 15 Buys, 12 Holds, and 8 Sells, TSLA carries a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $341.10 implies losses of ~23% in the year ahead. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.