In a detailed analysis that echoes previous critiques from figures like Michael Burry, former fund manager George Noble has cast a critical eye on the valuation of Tesla Inc. Despite the continued upward trajectory of Tesla's shares, Noble contends that the company's market price is fundamentally detached from its intrinsic value. He suggests that, even when factoring in ambitious ventures such as robotaxis and the Optimus humanoid robots, the stock is currently overvalued by at least five times, proposing a more realistic fair value of $80 per share.
Noble's valuation methodology, shared recently on the social platform X, involved a 'sum of the parts' approach, meticulously breaking down Tesla's diverse segments and comparing their estimated worth to that of industry peers and competitors. For the robotics division, specifically the Optimus project, Noble drew comparisons with established players like Boston Dynamics, valued at $5 billion, and Figure AI, which recently secured funding at a $39 billion valuation. He noted that both these entities are considerably more advanced in robot development than Tesla. Even with a generous application of Figure AI's valuation to Optimus, Noble calculated this segment's contribution to Tesla's share price at a mere $12.
Shifting focus to Tesla's burgeoning robotaxi business, Noble referenced projections for Alphabet Inc.'s Waymo, rumored to be pursuing an initial public offering at a $100 billion valuation. Applying a similar yardstick to Tesla's robotaxi operations, he estimated this segment's value to be approximately $30 per share. Furthermore, Noble pointed to a decline in the company's foundational automotive business, assessing its value at $60 billion, or $18 per share, based on comparable market data. The energy division, according to his calculations, would contribute an additional $20 per share to the overall valuation.
Combining these individual assessments, Noble arrived at a total valuation for Tesla of just $80 per share. This figure stands in stark contrast to the stock's current trading price of $438.07, underscoring the significant discrepancy he perceives. While acknowledging that his estimations are not without their approximations, Noble asserted that his 'back-of-the-envelope' calculations offer a far more grounded and realistic perspective than those championed by Tesla's most ardent supporters, whom he characterized as being overly fixated on price.
The critique from Noble follows a period where Tesla has faced increasing scrutiny. Last week, the company ceded its position as the world's leading electric vehicle manufacturer to Chinese powerhouse BYD Co. Ltd., reporting a second consecutive year of decreased sales. This development further fueled concerns among investors and analysts. Noteworthy investor Michael Burry had previously raised similar alarms, describing Tesla's valuation as 'ridiculously overvalued' and highlighting a projected significant drop in its fourth-quarter vehicle sales. The stock's current trading multiples, at 196 times forward earnings compared to an industry average of 17.47, continue to reflect an elevated market expectation, despite the growing chorus of warnings from seasoned financial experts.