Tesla Is ‘Fundamentally Overvalued.’ Stock Picks Up New Bear on Wall Street.

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Tesla is tough for auto analysts to value because it grows so much faster than traditional car companies have for generations.

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Bulls and bears endlessly debate what electric vehicle giant Tesla is worth. On Thursday, a new bear entered the fray. Despite all the positives, one analyst still can’t recommend buying shares.

Tudor Pickering analyst Matthew Portillo launched coverage of Tesla (ticker: TSLA) stock with a Sell rating and $537 price target. He covers a mix of energy and automotive names.

Portillo does seem impressed with Tesla’s operations, giving them credit for growing sales, the autonomous driving features and the company’s small stationary power storage business. “Don’t get us wrong, we think Tesla has done an amazing job of building a world class business in a number of segments,” writes the analyst. Still, he calls the stock “fundamentally overvalued,” believing that Tesla would need to ship about 8 million cars that have the ability to drive themselves in cities by 2030 to justify the current stock price. That’s “a tough ask,” according to the analyst.

Shares aren’t reacting to the bearish call though. Tesla stock was up 0.4% in early trading to about $755. The S&P 500 was up 1.2%, while the Dow Jones Industrial Average was 1.4% higher.

Even though his rating is Sell, Portillo’s target values the stock at about $540 billion. (Tesla has about 1 billion shares outstanding, making the math easy.) That’s far higher than any auto company in the world. Toyota Motor (TM) is worth roughly $300 billion.

Tesla is tough for auto analysts to value because it grows so much faster than traditional car companies have for generations. Analysts see value, but the spread is wild.

Removing the top and bottom price targets—which skew results—the spread between bulls and bears is about $930. The top target price, at more than $1,000 a share, makes Tesla worth more than $1 trillion. The bottom target prices, at about $200 a share, make Tesla the second most valuable car company in the world, behind Toyota. And the $930 spread is more than 120% of the current stock price. That’s about three times as large as the average bull-bear spread for a large stock.

The average target price for Tesla stock these days is about $666 a share, up from $423 at the beginning of the year.

Back at the start of 2021, 33% of analysts covering the company rated shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. Today, 47% of analysts rate shares Buy.

Tesla is actually getting more popular on Wall Street.

Write to Al Root at allen.root@dowjones.com