Tesla’s (TSLA) valuation continues to defy traditional earnings-based frameworks, and banking giant Barclays says investors should not expect the dynamic to change soon.
In a new CNBC interview, Barclays senior US autos and mobility analyst Dan Levy says Tesla now occupies a rare position in global equity markets, combining a massive market capitalization with valuation multiples that would normally be unsustainable for most companies.
“Tesla is one of two companies in the world that’s a $100 billion-plus valuation, but also trades at 150 times forward earnings or more. And so there is this recognition that clearly the market is pushing less of an emphasis on the near-term earnings, and I think it’s really on us to try to think beyond some of the near-term earnings dynamics when we’re doing that valuation framework.”
He says Tesla’s stock is being supported by factors that extend beyond fundamentals, making conventional valuation arguments less effective.
Levy points to Tesla’s unusually strong retail investor presence, as well as technical trading dynamics, as key forces underpinning the stock’s resilience even at elevated multiples.
“The other thing is remembering, look, there is a very heavy retail base. There is a very heavy technical base that really supports the stock here.”
Because of the structural supports, Levy says Tesla’s valuation premium may persist even if it appears stretched by traditional measures.
“And so that’s why, while the stock may seem sort of extreme from a valuation standpoint, we’re mindful that this may not change anytime soon.”
Earlier this week, reports emerged that Tesla is looking to invest $2 billion in xAI after reporting a solid Q4 performance, where the automaker beat expectations across the board.
At time of publishing, TSLA is valued at $416.56.
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