“We think this is a big, big – one of the biggest of all time – houses of cards that’s getting ready to fold,” Trainer explained while pointing out the recent Tesla Inc (NASDAQ: TSLA) fundamentals.
A new phase for Tesla Inc (NASDAQ: TSLA) is slowly emerging, perhaps away from the prior speculation to fuel its stock valuation. After resetting its outstanding shares by splitting them five times, the company is pushing towards its mission and venture different global markets. With the team and a significant number of investors optimistic that the company will deliver on the huge expectations, New Constructs CEO David Trainer is of the contrary opinion.
It’s worth noting that the firm led by Trainer has been providing insights into the fundamentals and valuation of private & public businesses. Whereby it combines human expertise with NLP/ML/AI technologies.
All through the coronavirus pandemic, Tesla Inc has proven beyond reasonable doubts that it can deliver in spite of any unpredictable challenges. Notably, for the first time since the beginning of the year, analysts are starting to get skeptical about Tesla shares continued rally. Metrics provided by Marketwatch indicates that the shares have begun a possible downtrend. After rising almost 400% through Friday, they have fallen around 5.5% in the past five days. Having closed last Friday with a profit of approximately 2.78% to trade at $418.32, TSLA stock has dropped 6.45% in the after-hours trading session.
What Trainer Thinks of Tesla Shares
Having tested TSLA shares on their radar, New Constructs through CEO thinks Tesla is going through a metamorphosis stage to reach its long term goals. However, according to them, short term investors rushing to buy TSLA stock now are risking so much. Trainer mentioned:
“Whatever best-case scenario you want to paint for what Tesla’s going to do – whether they’re going to produce 30 million cars within the next 10 years, and get in the insurance business and have the same high margins as Toyota, the most efficient car company with scale of all-time – even if you do believe all that is true, the stock price is still implying that profits are going to be even bigger than that”.
Trainer continued to deconstruct on the recent Tesla fundamentals, especially on the share split. He warns it is a huge ‘scam’ to lure inexperienced Wall Street traders. He added:
“We think this is a big, big – one of the biggest of all time – houses of cards that’s getting ready to fold. Stock splits are inconsequential to value. They’re not changing the size, they’re just dividing it up into more pieces. Honestly, I look at the stock split as a way to lure more unsuspecting, less sophisticated traders into just trying to chase this stock up and that is not a real strategy”.
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