GLJ Research CEO Gordon Johnson argued Wednesday that Tesla(NASDAQ:TSLA)was "grossly overvalued" at its current share price, contending that hyper-stimulus provided by the Federal Reserve fueled the stock's massive advance over the past two years.
In an interview with CNBC, Johnson called TSLA's valuation "absurd," contending that once it faces competition for electric vehicles in the U.S., its market share would drop dramatically.
As evidence, the GLJ Research CEO pointed to China, where he says TSLA has seen its share drop from 23% to 11%, and the EU, where Johnson says the company has experienced a deterioration from 33% of the market to 15%.
"When you see competition, Tesla significantly loses," he asserted.
Asked how the stock could reach its current levels given Johnson's view of the fundamental situation, the GLJ Research CEO pointed to the Fed for an explanation. He contended that the high levels of liquidity pumped into the system since the start of the pandemic created a situation where "every single asset blew up," including TSLA stock.
"Reality is going to set in when all this free money exits the market and I think that reality is going to be ugly for Tesla," he said.
Since the start of 2020, shares of TSLA have soared more than 1,160%, compared to a gain of 53% for the S&P 500 as a whole.
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