Hedge fund manager David Einhorn expressed his predictions that markets are too zealous about Tesla expanding electric-car sales as stockholders put their faith based on nothing Elon Musk.
“For the time being, investors remain hypnotized by Tesla’s CEO,” Einhorn stated on Wednesday. he also added: “We are skeptical that the company will be able to mass market its Model 3 at volumes and margins that justify the current valuation.”
Tesla shares have grown almost 50 percent in 2017. Einhorn has been telling investors for months that Tesla is overvalued, and expressed his argument on Wednesday.
“The enthusiasm for Tesla and other bubble-basket stocks is reminiscent of the March 2000 dot-com bubble,” Einhorn said. “As was the case then, the bulls rejected conventional valuation methods for a handful of stocks that seemingly could only go up. While we don’t know exactly when the bubble will pop, it eventually will.”
Tesla has announced it will begin manufacturing of the Model 3 sedan this July, which at around $35,000 will by far be the electric-car maker’s most affordable vehicle. Musk, 45, is thinking of mass-market demand for the sedan and has targeted making 500,000 vehicles a year in 2018, up from about 84,000 last year.
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