Tesla ‘The Biggest Meme Stock’ Ever? Expert Says ‘Too Much Emphasis On The Magic Wand Of Musk’

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When it comes to memes, Tesla Inc (NASDAQ:TSLA) CEO Elon Musk is a fan. But when it comes to calling his electric vehicle company a “meme stock,” he’s not amused. One investing expert, however, argues that Tesla deserves the meme stock label given its current valuation.

What Happened: Tesla has often traded with a valuation higher than its automotive peers, a valuation that Ark Invest CEO Cathie Wood believes should be a reality.

While experts argue whether Tesla should trade with a valuation of an automotive company or a technology company, the current valuation is significantly ahead of both sectors.

Trending: The same firms that backed Uber, Venmo and eBay are investing in this pre-IPO company disrupting a $1.8T market — and you can too at just $2.90/share.

Sharing thoughts on Musk’s new compensation package, Yale School of Management Senior Associate Dean Jeff Sonnenfeld didn’t hold back with the meme stock analogy.

“This is the biggest meme stock we’ve ever seen,” Sonnenfeld said in an interview with CNBC.

The investing expert highlighted the price to earnings ratio of Tesla being above 200. On Benzinga Pro, the PE ratio is 253.5x on a trailing twelve-month basis and 169.5x on a forward basis.

“Even at its peak, Amazon was nowhere near this level. The PE on this, well above 200, is just crazy. When you’ve got stocks like Nvidia, the price-earnings ratio is around 25 or 30, and Apple is maybe 35 or 36.”

Sonnenfeld said Tesla’s valuation is “crazy.”

“They’ve, I think, put a little too much emphasis on the magic wand of Musk.”

Why It’s Important: Asked about the new compensation plan for Musk, Sonnenfeld said it was “foolish” and “reckless” of the board and will turn into shareholders’ problems.

The investing expert said no one is worth $1 trillion in compensation. Sonnenfeld also said that if Musk leaves Tesla, as he hinted at as a potential without a higher ownership percentage, he would be the person most impacted if the stock went down.

“He’d be the biggest loser,” Sonnenfeld said.

In his interview, Sonnenfeld praised Musk’s talent and said there might not be anyone smarter or more entrepreneurial.

“He’s a brilliant guy.”

See Also: If there was a new fund backed by Jeff Bezos offering a 7-9% target yield with monthly dividends would you invest in it?

As for the premium valuation, Sonnenfeld also warned against shorting the stock.

“People shorting haven’t done well due to timing.”

Last month, Musk issued a warning to investors betting against the electric vehicle company.

“If they don’t exit their short position before Tesla reaches autonomy at scale, they will be obliterated,” Musk said, referring to a list of the top companies with short positions in the stock.

Sonnenfeld said he hopes that a succession plan is laid out for Tesla with someone new ready to take the company into the next phase. The expert highlighted Tesla losing market share in Europe and China with BYD dominating in certain markets.

“There isn’t a part of the world where Tesla isn’t falling under Musk.”

The expert said it’s time for Musk to move on and time for someone who “won’t cost a trillion dollars” to lead the company.

Photo: Shutterstock

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This article Tesla ‘The Biggest Meme Stock’ Ever? Expert Says ‘Too Much Emphasis On The Magic Wand Of Musk’ originally appeared on Benzinga.com