The stock exchange has already chosen a winner in the race for mass production of electric vehicles, says a market analyst.
Tesla’s high valuation – 137 times its forward price / earnings ratio at Tuesday’s closing price – speaks volumes about where investors are placing their bets as old automakers rush to develop their own EV projects, said Todd Gordon, founder by TradingAnalysis.com, to CNBC’s “Trading Nation”. on Tuesday.
UBS Global Research looked at the competition in a Tuesday note, saying Volkswagen, General Motors and Hyundai would “likely emerge as the best electric vehicle revaluation stories”. The company also lowered its price target on Tesla stock from $ 730 to $ 660 and raised its targets for GM and Ford.
Ford has had its best year since 2009 and GM its best since 2013. Tesla has had its worst year since 2016.
The legacy automakers “are sure to gain market share from Tesla in the near future,” said Gordon.
“But if you look at the billions of kilometers driven that Tesla has connected to its large data centers compared to the other electric vehicles, that’s not even funny,” he said. “Whoever has the most data will win in the end. So you can gain market share in the short term, but I think in the longer term … I think the market is already choosing who will be the winner.”
Tesla’s stock chart matches the company’s technological potential, Gordon said, adding that it bought on a recent slump.
Zoom In Icon Arrows pointing outwards
“On June 3, I increased my position by about 580,” he said. “I continue to be a Tesla bull. This is a long-term move that I will likely keep for years to come.”
Tesla stock fell a little more than 1% to $ 680.76 on Tuesday.
However, Ford’s chart stands out as a short-term opportunity, Gordon said.
The stock has regained ground thanks to strong earnings reports in recent quarters and has overcome a significant long-term downtrend, he said.
Zoom In Icon Arrows pointing outwards
“As long as we’re holding around $ 10 or $ 11, the artist formerly known as the Resistance is now support,” Gordon said. “That’s kind of any place to buy.”
Ford stock ended trading at $ 15.01, less than half, up 1%.
Tesla has found another fan in Delano Saporu, the founder and CEO of New Street Advisors Group.
A UBS own survey found that 43% of respondents in China who intended to buy an electric vehicle saw Tesla as Tesla, Saporu noted in the same interview with Trading Nation.
“This brand is still going strong, even with some negative sentiments,” he said. “The other thing I really like is that pretty low levels are approaching and the growth trade is now coming back into play.”
That could be a catalyst for Tesla’s shares, Saporu said, adding that while Tesla is comparatively expensive, Ford and GM are also “a little overbought” at this point.
“I think we still have a bit to go when it comes to Tesla, and I’m still very optimistic about Tesla,” said Saporu.
Disclosure: Gordon owns shares of Tesla. Saporu owns shares of Tesla personally and for customers.
Disclaimer of liability
