After the bell on April 19, Tesla announced Q1 results that sorely disappointed even its ardent Wall Street fans. Five price reductions so far this year, designed to bolster demand, lowered average sales prices so markedly that operating margins fell from over 19% a year ago to 11.4%. All told, earnings cratered by almost one-fourth. The battery-on-the-blink performance was far from the fabulous growth story that Elon Musk’s long been selling investors. On the news, no fewer than seven analysts pared their price targets for the shares. At midday on April 20, Tesla’s stock had fallen 9.3% to $164.40, erasing $58 billion in market cap, an amount equal to more than one-third the valuation of Netflix.
But for one leading analyst, the selloff isn’t remotely big enough to bring the EV king’s shares in line with its fundamentals. David Trainer, founder and CEO of investment research firm New Constructs, believes that using the most realistic projections for the likes of sales and earnings, Tesla’s worth something like $28 a share or one-sixth its current price—which by the way, is down 60% from its peak of $415 reached in late 2021. “Tesla remains hugely overvalued,” Trainer told Fortune, pointing to a $517 market cap that still amounts to twice the combined valuations of Toyota and Volkswagen.
