Bill Miller thinks Tesla is overvalued and highlighted three main issues that it faces
Tesla Motors Inc (NASDAQ:TSLA) has been time and again linked with a potential takeover by the world’s most valuable company, Apple Inc. (NASDAQ:AAPL), given both the companies’ game-changing roles and innovation in their respectively industries, as well as to give a financial boost to the loss-making, Californian EV maker. While the possibility of such a move seems highly unlikely, investment legend, Bill Miller, sees it as an interesting buying opportunity for the iPhone maker.
Speaking at the Investor Podcast, Forbes reported that the former Morngingstar’s fund manager of the decade gave his view about darlings of Wall Street: Amazon, Apple, and Tesla. While believing Tesla shares to be overvalued, he said it would be an interesting opportunity for Apple to purchase Tesla, as it has the financial backing to support Tesla’s ambitious projects and accelerate its launches in new markets.
Despite the ingenuity of Elon Musk, chief executive at Tesla, Mr. Miller thinks that Tesla’s current stock price is very unattractive. As of 11:24 AM EST, Tesla shares were trading up 0.50% at $203.51 and 1.70 million shares were traded compared to average daily trading of 4.45 million.
The investor highlighted some of the main issues he sees at Tesla: SolarCity acquisition, the Trump administration, and competition.
Tesla says that it was essential to acquire SolarCity for its mission to accelerate the world’s transition to sustainable energy, as it plans to develop integrated solar and storage products with the solar installer and empower its customers with the entire energy cycle from generation and storage to consumption.
While a few Tesla bulls and shareholders agree with Mr. Musk’s vision, Mr. Miller believes that the merger only significantly complicates the business analysis. There are several analysts who believe the same, calling the merger a SolarCity bailout and an unneeded distraction.
He also thinks that the Trump administration will likely repeal the incentives on alternative energy and electric cars once they take over the White House. While there is a significant likelihood for this, Mr. Musk believes that it would only improve Tesla’s competitive position.
Lastly, he highlighted that traditional car manufacturers with much more resources and funds are gearing up to produce more competitive EV models. These companies are also willing to make losses on their battery-powered cars just to meet emission standards.