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Herb Greenberg Won't Be Investing In Tesla Any Time Soon: Here's Why Not

GM, TSLA, F | August 4, 2016

Herb Greenberg of Pacific Square Research said he is not inclined to put his money on Tesla Motors Inc (NASDAQ: TSLA), as valuing the electric car maker is "nearly impossible" for the veteran investigative financial journalist.

Tesla, which has yet to report a profit, is grossly overvalued compared to its established profit-making rivals. Tesla has a market cap of about $33 billion versus General Motors Company (NYSE: GM)'s about $48 billion and Ford Motor Company (NYSE: F)'s about $49 billion.

"It doesn't make sense on valuation perspective as Tesla is trading on three-quarters of market cap of Ford and GM," Greenberg said on Benzing's PreMarket Prep show.

Further, Tesla's valuation also looks expensive on the revenue front. GM and Ford generate combined annual sales of more than $290 billion and generate profit selling millions of cars each year. Tesla's previous year revenue was just over $5 billion.

As such, trading on Tesla "is too wild" for Greenberg, and he won't put money on the stock.

For the second quarter, Tesla reported an adjusted net loss of ($1.06) per share, wider than consensus estimates, which called for a loss of ($0.52) per share. Revenues of $1.56 billion also came in short of expectations for $1.62 billion.

On the other hand, 14,402 deliveries beat estimates of 14,307 units. For the second half of the year, management reiterated its target for 50,000 deliveries.

Shares of Tesla are volatile since the announcement of results. At time of writing, shares of Tesla were down 0.08 percent to $225.61 and they were trading in a range of $222.05–$227.50 on the day.

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