Tesla Stock Falls After Analyst Warns Investors Should Move To ‘Sidelines’ Following 170% Rally

In a Wednesday note to clients, Barclays analyst Dan Levy advised Tesla investors to “move to the sidelines,” explaining the stock’s 170% rally over the last six months is too rich for his liking.

Tesla’s nearly $300 billion in added market capitalization over the last month came due to surging valuations and not due to a material change in earnings expectations, Levy continued.

Shares of the firm led by mercurial CEO Elon Musk slid 3% in early trading to $266, on pace for their largest daily loss since April 26, though they remain close to their highest price since September.

Tesla stock has enjoyed a variety of tailwinds, including possible new revenue streams from the widespread adoption of its car chargers and mass optimism about what the artificial intelligence boom may mean for big tech’s top and bottom lines.

Tesla’s “near-term fundamentals…have at best remained unchanged amid the run-up” in its share price, Levy added, setting a $260 price target for the stock, implying 5.3% downside despite noting he remains bullish on the company long-term.

Relative to earnings, Tesla’s valuation is far higher than it was for most of the last year, though it’s far below what it was when it traded above $400 in 2021: Its stock price to expected earnings ratio is nearly three times as high as it was at beginning of this year, though it’s less than half of what it was a year ago.