Tesla’s (TSLA) valuation has gotten “out of control,” Matt Maley, equity strategist and managing director at Miller Tabak, told Yahoo Finance Live. “Fundamentally it’s just not there.”
The electric vehicle maker is up a whopping 600% year-to-date as the company outperformed during the pandemic and capital has flowed into the EV space. The stock’s most recent breakout came in November following news of inclusion in the S&P 500.
On Tuesday Tesla’s market cap was sitting just north of $554 billion, with the stock up about 3%.
“There are opportunities in the marketplace, where you can make a lot of money with a lot less risk,” said Maley.
“There are not the same risks we had two years ago in this company. That doesn’t mean there aren’t any risks. This stock will see some significant declines over time,” he added.
“If you’re a long-term believer and you want to hold it, that’s great. But I think for those who want to add to it, the valuations have become out of control,” he said.
Maley notes investors have been willing to pay high valuations for stay-at-home trades amid the pandemic, but “nothing like what they’re seeing right now for Tesla.”
“Tesla’s not going to change the world to that degree in my opinion, but maybe I’m wrong. We’ll see,” he added.
The electric vehicle space in general has seen a massive run-up in the last couple of months. However on Tuesday several electric vehicle start-ups were down, including NIO (NIO), XPeng (XPEV), and Li Auto (LI).
Nikola (NKLA) lost another 16% today after a massive decline on Monday following the announcement of a skinny partnership with GM (GM) which does not include production of the Badger pick-up truck or an equity stake in the electric truck startup.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre