Investor Michael Burry, well-known for his prescient bets against the housing market, has recently reiterated his strong reservations about Tesla Inc.'s market valuation, particularly in light of the company's slowing sales momentum. He characterized the company's stock as "ridiculously overvalued," a sentiment he shared on social media after Tesla released its fourth-quarter vehicle sales estimates, which fell short of analyst expectations.
Tesla's own compilation of analyst projections indicates an estimated 422,850 units sold for the current quarter, representing a nearly 15% decrease from the previous quarter and a similar decline year-over-year. This anticipated downturn marks the second consecutive year for reduced annual vehicle sales, with overall estimates hovering around 1.64 million units, a notable drop from the nearly 1.8 million global deliveries in the preceding year. Despite these figures, Tesla maintains its position as the world's most valuable automaker, boasting a market capitalization of $1.53 trillion and trading at a staggering 204 times its forward earnings, significantly surpassing the industry's average price-to-earnings ratio of 17.47. Burry has also previously criticized CEO Elon Musk's substantial compensation package, warning that it contributes to shareholder dilution, an issue compounded by the company's lack of stock buybacks.
Adding to the discussion, fund manager and Tesla analyst Gary Black commented on the unusual nature of Tesla releasing its quarterly sell-side consensus estimates, suggesting an intentional effort to disseminate the information broadly. He anticipates that actual fourth-quarter deliveries will likely fall closer to the 420,000 unit mark rather than the initially higher 445,000 range. Despite these concerns, Tesla's stock performance reflects its market position, with strong momentum and quality scores in certain rankings, indicating a favorable price trend across various timeframes.
In the dynamic world of finance, discerning market realities from speculative fervor is crucial. While innovation and leadership drive growth, a grounded assessment of financial metrics and sales performance is essential for sustainable success and investor confidence. The ongoing discourse surrounding Tesla's valuation serves as a powerful reminder of the importance of a balanced perspective in evaluating high-growth companies.