Tesla has become one of the most popular car makers, they are doing the right thing to save our planet and so investors are happy to buy they stock and push its price higher and higher.
However, Tesla´s stock might be horrendously overpriced, because investors are buying into an idea and vision of future and overlooking economic data.
Here is 4 reasons why Tesla stock is highly overpriced:
Last year, Tesla had only 2 profitable quarters and lost $773 million! On the other side, GM has posted $9 billion profit in 2016.
Electric and hybrid cars are still niche buys. They would need to sell millions of these cars to justify Tesla´s stratospheric stock price.
Over 1/3 of US market sales are pick-ups and SUVs. EVs sales globally were only 800,000 compared to 17 million pick-ups and SUVs last year.
US car buyers love big cars and it seems that it will take a while till EV sales will become bigger in USA.
At least EV cars price would need to be much lower to turn the tide.
3) Competition on rise
Up to now, Tesla did not have many competitors in electric vehicles market. But that is about to change. Big boys are joining the game and they will grab a huge piece of Tesla´s market with their cars like Hyundai Ioniq Electric, Jaguar I-Pace Crossover, Porsche mission E Sport Car, BMW X3 Crossover or Volkswagen I.D. Crossover.
Also Chinese and Korean giants can steal Tesla´s market share with their low-cost, decent EV vehicles.
4) Glamour effect
Investors love to buy Tesla´s stock because of their glamour factor. Of course, address in Silicon Valley where everything is hi-tech helps.
But glamour often has a very short life. Prospect investors should not forget economic data and incoming 30 models of Tesla´s competitors.