Elon Musk's Tesla is grossly overvalued and its share price could end up plunging 65%, an analyst has warned. RothCapital analyst Craig Irwin, who has long been bearish on Tesla, recently reiterated that his price target for Tesla is $85. That means the company's share price will fall by more than half from current levels. The company's shares closed last week at around $248.
"I'm bearish because I think it's grossly overvalued," Irving said in an interview last week.
He compared the company to Toyota, which produces about 9 million vehicles a year. By comparison, Tesla produced just 1.37 million vehicles last year.
"There's nothing Tesla doesn't do that Toyota doesn't have," Irving said. "If it sells a fraction of [Toyota's] sales, why is it trading at a price many times higher than Toyota's?"
Still, Irving maintained his "neutral" rating on Tesla stock as the electric car maker still has some tools to support its stock price.
One of those tools is the potential release of a new generation of cars from Tesla, something Musk has been talking about for years. Earlier this year, a source revealed that Tesla executives had planned to meet with Indian officials to discuss building a factory for the small car that sells for less than $25,000.
"But from now on, I think it's going to be a slow process over the next couple of years," Irving warned.
It is worth noting that Tesla CEO Elon Musk responded to Irving’s views, believing that he ignored Tesla’s potential in the fields of artificial intelligence and autonomous driving.
Electric vehicle analyst Sawyer Merritt shared a video of Irving's interview, to which Musk responded: "He has the wrong frame of reference. We are an AI/robotics company."
In September this year, Musk said: "Almost all of Tesla's long-term value will come from AI and robots, including cars and humanoid robots."