Recent news that RBC Capital Markets analysts have admitted they were wrong on their call on Tesla Inc. (NASDAQ:TSLA) in a report released this past week has been a factor that has helped buoy this stock to a new all-time high. The investment bank raised its rating for the company, citing a rising share price as positive for the electric vehicle maker in raising capital to fund growth or pursue attractively priced acquisitions in this environment.
Additionally, estimates of how big the EV market could eventually turn out to be in just a few years have been consistently increased across the board. The size of this potential market is a key factor contributing to Tesla’s meteoric rise. As the market leader in this segment, investors are hopeful that Tesla will be able to increase sales at a faster pace, accelerating the company’s top and bottom line growth.
With a current valuation of more than 25-times sales, this company is priced at the nosebleed levels of what any investor would call ridiculous. I think there’s way too much in the way of growth factored in at these levels today. Tesla has a great brand and a great growth trajectory, but thinking that this company can keep up with expectations is a whole other ball game. Speculators and momentum investors aside, anyone with a tinge of risk aversion ought to avoid this stock at all costs right now. I think the downside potential for this risk asset far outweighs the benefits right now.
Invest wisely, my friends.
