Tesla (NASDAQ:TSLA) stands among the most closely watched companies on the planet. Its electric vehicles are now a common sight on roads worldwide, and its CEO, Elon Musk – currently the world’s wealthiest individual – ensures the company remains firmly in the spotlight.
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Musk’s ambitions appear almost limitless, and he has set expectations high yet again with his declaration that Tesla will become the most valuable company in the world (“and probably by a long shot”).
Strong words for sure, and the CEO’s record-breaking compensation package depends on his success in propelling the company to a $8.5 trillion market cap. The blueprint for doing so rests on his ability to create an autonomous future full of robots and self-driving vehicles.
While these innovative products are certainly mouthwatering, investor Anthony Di Pizio worries that too much excitement is already reflected in TSLA’s “sky-high valuation.”
“Every Tesla shareholder should be aware of the very real chance the stock sees massive losses,” explains the investor.
Di Pizio reminds investors that roughly three-quarters of Tesla’s current revenues are sourced from its electric vehicle sales, which fell throughout the first half of the year. The investor predicts that Q4 could be another weak quarter after a brief, tax incentive-buying uptick in Q3.
Going forward, more pain could be on the horizon as competition in the EV space heats up. For instance, China’s BYD brand saw its sales triple year-over-year in Europe and the United Kingdom, while Tesla’s dropped by 48%.
Of course, EV sales aren’t what has boosted Tesla’s share price into the stratosphere, as reflected by a price-to-earnings ratio that is approaching 300x. This is light-years beyond the Nasdaq-100 index’s P/E of 32, and also significantly higher than all of TSLA’s Magnificent 7 peers.
Di Pizio acknowledges that self-driving vehicles and humanoid robots could turn into “home runs,” capable of driving far more sales than Tesla’s current EV business. These gamechangers have yet to hit the market, however, leaving the company reliant on its EV business for now.
What does that mean going forward? It’s impossible to know for certain, but Di Pizio is ready to make at least one prediction.
“One thing is for sure: Any potential upside in 2026 looks limited as Tesla’s new products simply won’t scale up in the next 12 months alone,” sums up Di Pizio. (To watch Anthony Di Pizio’s track record, click here)
Wall Street’s view is split, with 12 Buys, 12 Holds, and 10 Sells on record. That mixed stance leaves TSLA with a consensus Hold (i.e., Neutral) consensus rating. The Street’s average 12-month price target sits at $383.54, suggesting ~13% upside from current levels. (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