Gary Black: Tesla Valuation So Stretched Institutional Investors Avoid It

Gary Black, managing partner at The Future Fund LLC, stated that Tesla Inc. (TSLA) has a valuation so "stretched" that most institutional investors are unwilling to touch the stock. He argued that the advantages of Full Self-Driving (FSD) technology are insufficient to justify the current price.

Rating Change

Black did not announce a change in his rating for Tesla stock, but he expressed his view that the stock is excessively overvalued to the point that institutional investors are avoiding it.

Analyst's Rationale

Black believes that Tesla's current valuation does not align with its expected profit growth. He points out that FSD technology, while important, cannot alone bridge the gap between the stock's current price and the company's financial fundamentals. He thinks the market is overestimating the value of this technology.

Context

Black's comments come at a time when Tesla faces multiple challenges, including declining demand for electric vehicles in some markets and increased competition. Delays in the Cybertruck launch and regulatory pressures on FSD technology add to the uncertainty. On the other hand, some analysts remain optimistic about Tesla's long-term prospects, especially with its plans in AI and robotics.

What to Make of It

Black's remarks reflect genuine concerns among some investors about Tesla's high valuation. However, the stock remains widely debated among analysts, with some viewing it as overvalued and others as a long-term investment opportunity.