Tesla's stock surge 'feels like a mania': Strategist

Gina Sanchez, founder and CEO at Chantico Global, joins "Squawk Box" to discuss Tesla's big market moves on Tuesday.

Shares of Tesla are roaring higher — but some are worried Elon Musk’s electric-car maker might be a speculative bubble that sometimes occurs in financial markets, especially near the end of bull markets.

Rising more than 110% in 2020 alone, some believe Tesla has become unmoored from its fundamentals, fueled by short covering and the fear of missing out among investors not holding the stock.

“Tesla has gone parabolic,” said Matt Maley, chief market strategist at Miller Tabak. “This is taking Tesla well above a level that would be supported by its current fundamentals. … The stock is going to get absolutely clobbered at some point before long.”

Tesla shares surged more than 13% on Tuesday, at one point trading above $900 for the first time, and analysts still can’t keep up with the run. The average 12-month price target of analysts is $493, according to FactSet. That new target, which is where analysts expect the stock to be a year from now, is more than 40% below where the stock closed on Tuesday.

“When the stock market bubble implodes, it will have been started by the surge in Tesla shares beyond speculative zeal,” former presidential candidate Ralph Nader wrote on Twitter last month amid the run.

Flashbacks

Some investors are seeing resemblance between the unstoppable enthusiasm over Tesla and the bitcoin bubble a few years ago. After bitcoin’s unprecedented run to nearly $20,000 a piece in 2017, the cryptocurrency crashed a whopping 65% in a span of just one month. By the end of 2018, bitcoin fell below $4,000, an 80% drop from its peak.

Others are getting flashbacks to the dot-com bubble in early 2000s, when internet stocks exploded and eventually collapsed, shedding nearly 80% of value within seven months.

In December 1999 before the bursting of the tech bubble, Amazon’s valuation hit more than 50 times its IPO price. Right now, Tesla is trading at about 98 times forward earnings, according to FactSet.



Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.

Connect with CNBC News Online

#CNBC
#CNBC TV

[KevinCampbell-po]

With around $120k invested in Palantir stocks, any suggestions for additional stocks to diversify across various markets? Looking for a well-rounded portfolio that balances risk aversion with returns meeting yearly inflation concerns.

[kubismatik]

Summary: We don’t understand this stock and we just hope the price action is simply FOMO.

[Anthony__]

Tesla’s 2012 model S still better range and performance and cheaper than any other car makers EVs

[g.elliott]

These people don't get it. Tesla is not a car company, it's the leading innovator in several industries.

[ToddiThaKid]

"It's still only 18% of the electric car market"
Thats the most stupid thing I've heard for weeks. If we can agree on electric cars being the future, how is 18% of the market bad 😱😅 Thats extraordinary!

[filipsalamon]

I wonder why they pick just random people from the streets of new york and ask them about a company they know nothing about.

[vladislavbashev]

Teslas are better budget vehicles than most of the cars. ICE are a money
pit, once it starts breaking you just cant stop pouring money in them. +
they depreciate so fast, its insane. Long term if you want to save
money, you buy Tesla.

[toinvesting]

When Tesla feels like bitcoin but there’s actually something behind it... short squeeze anyone? 🔥🩳🔥

[theknave]

Hint: Most of this jump in TSLA is from institutional investors.
I just thought you oughta know.

[Cywrx]

People say: everything that goes up it eventually comes back down. Unless it goes into orbit, but what does Elon knows about taking things into orbit... wait, on the other hand, yeah

[saulens]

"You have a lot of existing market players' " she says. I will assume they are playing in the sandbox or their balls for the last 8 or so years?

[Eusantdac]

"Who's the retail buyer?"" - Me. Gen X looking for a better place to put money rather than a savings account that gives peanuts back. Also, looking for a morally right place to invest. Not willing to invest in fossil fuels, or blood dimonds, or Lockheed Martin death weapons, or anything like that.

[wiyxgyo]

It’s either a $20-$30 auto stock, a $200-$300 battery stock with an auto segment, or a $2000-$3000 AI, data science, and autonomous vehicle tech company with battery and auto segments.

[machelvet]

3:22 "... yeah, ... even the biggest Tesla bulls have taken money off of the table."
What kind of answer is that to:
2:45 "... we had on Ron Baron, yesterday. ... if you got a huge winner, do you take some off the table? - And he was like: ABSOLUTELY NOT!"

[hitgucvkj]

those robin hood retail investors are just a small portion of people who bought in on the high and will sell low. The bull, like us will hold the stock for decades to come.

[Handlethis]

These guys still don’t get it. The stock value is just now catching up and retail investors are supporting Elon’s vision of a future with clean energy.

[masonslcs]

All these people calling Tesla Fanatical have to do is buy and drive one everyday and they will be on board too. Best vehicle I've ever had and I've had 14 cars and trucks in my lifetime.

[denuncimesmo]

I prefer to be a maniac and invest in the future of humanity than to be betting on the old industry, another issue that few address, companies that bet their pensions based on the old fossil fuel industry are bound to break.
investing in electric cars, and renewable energy is not an issue that should be addressed by market analysts but rather by coherent people who understand about the environment and that the environment needs and requires that human beings change our thoughts, yes I prefer to be a maniac for more than betting on the old industry that is already with its days numbered.
the tip is for these journalists, these newspapers that also belong to the old industry, stay smart.

[foodtv]

why CNBC people hate TSLA so much? because they missed out?

[lizmasi]

I'll be laughing all the way to the bank with my Tesla stock!