In the midst of Tesla Inc.'s (NASDAQ:TSLA) ongoing stock price rise, George Noble, an experienced fund manager with a track record leading Fidelity’s Overseas Fund, has raised serious doubts about the congruence between Tesla's market valuation and its underlying fundamentals. Speaking on the social media platform X, Noble provided a detailed breakdown of Tesla’s various business entities, assessing each against comparable industry players to derive a composite valuation for the company’s shares.
Delving into Tesla’s robotics initiative, particularly the Optimus humanoid robot project, Noble highlighted comparisons with more established and advanced competitors. He pointed out that Boston Dynamics, a robotics pioneer, is valued at approximately $5 billion, while Figure AI, a newer yet significantly more valued competitor, recently secured funding at a valuation of around $39 billion. Both companies are reportedly much farther along in robotic development than Tesla.
Noble argued that, even assuming an optimistic valuation for Tesla’s Optimus project comparable to Figure AI’s impressive $39 billion valuation, this component would contribute roughly $12 per Tesla share. This figure provides an explicit quantification of potential value for the robotics segment, illustrating modest contribution relative to Tesla's current share price.
Turning to Tesla's aspirations in autonomous ride-sharing services, particularly its planned robotaxi operations, Noble compared Tesla with Alphabet Inc.’s (NASDAQ:GOOG) Waymo. Waymo is speculated to be considering an initial public offering (IPO) valuing it near $100 billion. Applying a similar valuation to Tesla’s robotaxi division would correspond to an estimated $30 per Tesla share.
Evaluating Tesla’s mainstay automotive business presented a more sobering outlook. Noble described this core segment as already undergoing a decline, which, when assigned a value based on comparable companies, yields a valuation near $60 billion. This evaluation equates to about $18 per share, indicating a substantial downward adjustment relative to Tesla's broader market capitalization.
Additionally, Tesla’s energy-related ventures, including solar and energy storage products, were appraised to contribute roughly $20 per share to the company's overall valuation.
Compiling these discrete valuations from robotics, robotaxi, automotive, and energy arms, Noble concluded that Tesla's aggregate share price ought to approximate $80. This figure starkly contrasts with Tesla's actual trading value, which stood at approximately $438.07 per share, as recorded in late trading.
While acknowledging the preliminary nature of such estimations, Noble maintained that his straightforward, piecewise valuation methodology offers a more grounded perspective than the exuberant price projections favored by many Tesla proponents, whom he described as almost reverential in their optimism toward the stock price.
These valuation concerns come amid significant shifts in the electric vehicle (EV) market landscape. Recently, Tesla ceded its position as the leading global EV manufacturer to BYD Co. Ltd. (OTC:BYDDF), a prominent Chinese automotive producer. This transition follows an extended period marked by consistent declines in Tesla's vehicle sales, with the company reporting shrinking volumes for the second straight year.
Adding to the chorus of skeptics, renowned investor Michael Burry recently characterized Tesla as "ridiculously overvalued," particularly drawing attention to lowered vehicle sales estimates for the fourth quarter, which portend challenges ahead for the automaker's performance metrics.
Examining Tesla's stock performance, shares declined 2.59 percent on Friday to close at $438.07, before posting a modest overnight gain of 1.66 percent. Trade metrics reveal that Tesla currently trades at an exceptionally elevated price-to-earnings ratio of approximately 196 times projected earnings, a stark juxtaposition to the industry average multiple near 17.47.
Despite these notable valuation disparities, Tesla continues to rank highly in momentum and quality in market rankings such as Benzinga’s Edge Stock Rankings, reflecting favorable price trends over various investment horizons, both short- and long-term.
The juxtaposition of Tesla’s lofty stock price against its segmented valuation analysis and recent market dynamics conveys a complex narrative surrounding the company’s intrinsic worth versus investor expectations. Going forward, market participants will likely continue scrutinizing Tesla’s performance across its diversified ventures to better calibrate realistic valuations aligned with operational achievements.