Roth Capital: Tesla should trade at a ‘quarter’ of its current stock price

Tesla Inc (NASDAQ: TSLA) on Monday said it will seek shareholder approval for a stock split, suggesting confidence in its future. Still, a Roth Capital analyst says the EV stock should not be worth more than $250.

Irwin defends his largely bearish call on Tesla

Craig Irwin’s price target on Tesla suggests a whopping 75% drop from here. Explaining why he has such a gloomy outlook on the electric cars manufacturer, the analyst said on CNBC’s “Squawk on the Street”:

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Toyota, largest automotive company globally has a $300 billion valuation, sold 9 million cars last year. There’s nothing that Tesla has but Toyota doesn’t. Toyota has a much closer relationship historically to Panasonic. Tesla has a trillion-dollar valuation and sold just 900,000 cars.

He agrees that TSLA deserves a hefty premium for creating the first functioning marketplace for EVs, but still sees $300 billion as an appropriate valuation for Tesla even after applying that premium.

Tesla is yet to see real competition

According to Irwin, Tesla’s valuation largely stems from a lack of competition, but that landscape is expected to change quickly over the next five years. He noted:

By the end of 2025, there’ll be 500 EV models on the road; 60 new EV models coming this year. Many of them will be successful. Tesla is an exciting company, but I don’t see them doing 20 million vehicles. There’ll be too much competitive pressure.

Last week, however, Tesla officially launched its Berlin Gigafactory that’s expected to help ramp up production.