It has been a rollicking few months for Tesla (NASDAQ:TSLA), in large part buoyed by its CEO’s close proximity to the next president. Indeed, shares have gained around 80% since Donald J. Trump’s electoral victory almost two months ago.
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Whether this will translate into long-term gains over the course of the next years is, of course, an open question. At the end of the day, the EV maker still needs to live up to the hype by delivering the numbers that the markets are expecting, both in the U.S. and abroad.
Still, with 2024 ending on such a positive note for Tesla, could more gains be on the horizon in 2025?
Not according to top investor Kevin George, who believes that Musk’s political proclivities-among other developments-will lead to a bumpy road in the coming months.
“I recommend selling Tesla, Inc. stock due to poor performance, political risks, and overvaluation, despite recent gains following Donald Trump’s election win,” says the 5-star investor.
George further explains that the flip side of backing Trump’s winning campaign is upsetting close to half of the polarized American electorate. This political decision could have repercussions well beyond the U.S. domestic market.
“It is not only an issue in the U.S. and Canada, but also in Europe, where governments and the media align with the values of the Democrat party and see Trump as a populist choice,” adds the investor. George notes that the company’s European sales are down 14% this year, perhaps already demonstrating the perils of this political dynamic.
Furthermore, sales in China have been an important contribution to Tesla’s overall revenue, continues George, even helping to mask weaker performance elsewhere. The investor cautions that a U.S.-China trade war under the next administration would certainly jeopardize these robust figures.
“It is starting to look like Musk needs China more than China needs Musk, and his political affiliation may still see him lose more than he wins,” George writes.
In addition, the rapid share gains over the past few weeks have boosted share prices sky-high, another concern for the investor. In fact, George points out that Tesla’s P/E ratio of 120.7 is a whopping 546% higher than the sector average.
Urging investors to avoid paying the “Musk premium,” George is rating Tesla a Sell. (To watch Kevin George’s track record, click here)
The views on Wall Street, while not quite as downcast, don’t leave much room for optimism either. With 13 Buy, 12 Hold, and 9 Sell ratings, TSLA is a consensus Hold (i.e. Neutral). Its 12-month price average price target of $294.30 would translate into losses of ~35%. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
