Here’s Why a Blog Made Tesla Investors Quake
Tesla Motors (NASDAQ:TSLA) trades at approximately 265 times its earnings. By comparison, Ford (NYSE:F) trades at 11 times its earnings; GM (NYSE:GM), 10 times earnings. Those numbers are there for all to see, but one blog post from an NYU professor has succeeded where many others have failed — he’s put doubt into the minds of Tesla investors, and it’s because he’s been right about overvalued stocks in the past.
Aswath Damodaran is a finance professor who lectures on valuation at NYU’s Stern School of Business. He also writes a blog in which he explores subjects from classes. In the past year, he has made the case of why it’s time to sell Facebook (NASDAQ:FB) and, most notably, that Apple’s (NASDAQ:AAPL) momentum was unsustainable. In the latter case, he made the call just prior to Apple’s shares plummeting amidst troubles in 2012.
Yet all roads lead to Tesla. Damodaran posted a blog on Wednesday, September 4, in which he reasoned Tesla was worth $67.12 per share. It took a few days for his humble, scholarly blog to reach investors, but observers are suggesting it was behind Tesla’s drop of 2 percent on Friday (Tesla was up 0.5 percent for the week). As can be expected, the backlash from Tesla bulls came fast and furious.