Tesla (NASDAQ:TSLA) shares have been on a rollercoaster ride since their December high, but last week gave investors something to cheer about.
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Nvidia CEO Jensen Huang took center stage at the Consumer Electronics Show in Las Vegas, unveiling significant advancements in AI technologies poised to revolutionize autonomous vehicles. He introduced Nvidia’s ‘Cosmos,’ a series of foundational AI models designed to enhance machine perception and interaction with the physical world, which are expected to accelerate the development of self-driving cars.
So, could the autonomous vehicle revolution drive Tesla to another year of exceptional gains in 2025? Not everyone thinks so.
One top investor, known by the pseudonym JR Research, argues that the optimism surrounding Tesla may have gone a bit too far.
“The Tesla hype has reached a peak, as sellers are circling in anticipation of a blow-off and potentially steep pullback,” asserts the 5-star investor, who sits in the top 2% of TipRanks’ stock pros.
JR points out that the market has already priced in the successful execution of Tesla’s Robotaxi business – even though a fully commercialized model has yet to be launched.
Moreover, the investor highlights Tesla’s soft 2024 delivery numbers, while expressing doubt regarding the company’s ability to meet Musk’s bullish projection of 20% to 30% growth in deliveries in 2025. JR describes this projection as “increasingly unrealistic,” citing intensifying competition in China and more cautious policy directions from Washington.
“Although Musk has solidified his influence within Trump’s inner circle, the fact that Trump has demonstrated his hawkish instincts on zero emission mandates while celebrating ‘drill, baby, drill’ shouldn’t be taken lightly,” notes the investor.
With Tesla’s Forward EV/EBITDA multiple at 63x (well above the 4.5x multiple of other car companies), JR believes everything needs to go right for the company to justify its current share prices.
“Not only do we have to make sure Elon Musk delivers on every single quarter of delivery estimates, the margin of safety in anticipating continued autonomous and robotaxi driving delays seems exceedingly low,” the investor concludes.
As a result, JR has assigned a Sell rating to Tesla shares, urging investors to avoid getting caught up in the hype. (To watch JR Research’s track record, click here)
Wall Street analysts take a more balanced stance. The consensus rating on Tesla is Hold (i.e. Neutral), based on 13 Buys, 12 Holds, and 9 Sells. However, the average price target of $325.40 suggests a potential 24% downside from current levels. (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.
