Investment research firm says Telsa is a very dangerous stock

Tesla’s stock has moved up a lot and it's hard to ignore for most investors that are willing to speculate. It has moved over 500 percent in the past year. Also, the stock continues to soar even after the 5 to 1 stock split.  


Since Tesla's stock continues to rise, a lot of new-age investors ganged up on the stock and they continue to buy it all the way up. However, a stock research firm has come to warn people that Tesla is a very dangerous stock in terms of valuation. 


Tesla stock has gone up over 400 percent in the year 2020


David Trainer of New Construct investment research says that Tesla is the most dangerous stock on Wall Street and that fundamentals do not support such a high price of valuation. 

"Tesla stocks is dangerous " - Trainer 


“Whatever best-case scenario you want to paint for what Tesla’s going to do – whether they’re going to produce 30 million cars within the next 10 years, and get in the insurance business and have the same high margins as Toyota, the most efficient car company with scale of all-time – even if you do believe all that is true, the stock price is still implying that profits are going to be even bigger than that,” Trainer told CNBC’s “Trading Nation” on Thursday.


He added that the stock price is implying between 40% to 110 % market shares based on the average selling price. “At its current average selling price of $57,000 and assuming 10.9 million car sales by 2030, that implies 42% market share”, Trainer says. Tesla is currently trading at 159 times its earnings.


“We think this is a big, big – one of the biggest of all time – houses of cards that’s getting ready to fold,” said Trainer.

Trainer also said that the recent stock split is another reason why Tesla stocks is dangerous for new Tesla stock investors.

“Stock splits are inconsequential to value. They’re not changing the size, they’re just dividing it up into more pieces. Honestly, I look at the stock split as a way to lure more unsuspecting, less sophisticated traders into just trying to chase this stock up and that is not a real strategy,” said Trainer.

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