Prominent Tesla Analyst's Firm Sells All TSLA Shares, Citing Valuation and Future Concerns

Gary Black, a prominent Tesla analyst and managing partner at The Future Fund, has announced that his firm has divested its entire holding in Tesla (TSLA) stock. This marks the first time since 2021 that The Future Fund does not hold a position in the electric vehicle giant, citing concerns over valuation and future prospects.

Key Takeaways

• The Future Fund sold its TSLA shares at $358, with a price target of $310.

• Primary concerns include Tesla's high price-to-earnings (P/E) ratio and declining earnings estimates.

• Skepticism surrounds the potential impact of Robotaxi and the strategy for affordable models.

Disconnected From Underlying Fundamentals

Black stated that The Future Fund sold its TSLA shares at $358, maintaining a price target of $310. This target is based on a forecast of 5.4 million Tesla volumes and an adjusted EPS of $12 by 2030. The core of Black's concern lies in what he perceives as a disconnect between Tesla's stock price and its fundamental financial performance.

P/E Ratio and Delivery Concerns

According to Black, a major factor in the firm's decision was Tesla's 2025 P/E ratio of 188x. This is particularly troubling given that earnings estimates have continued to fall, dropping 5% in the past week and 40% year-to-date. This decline is attributed to weaker-than-expected year-to-date deliveries, including disappointing April results.

Black anticipates a 12% decline in quarterly deliveries and a 10% decrease for the full year. These projections are more pessimistic than Wall Street's estimates, which foresee a 7% decrease for Q2 and a 5% year-over-year decline.

Robotaxi Skepticism

Despite widespread belief that Tesla's Robotaxi platform could be a significant catalyst, Black expressed skepticism. He believes the risk-reward associated with the Austin Robotaxi test is "asymmetrical to the downside." This contrasts with the view of other analysts, such as Wedbush's Dan Ives, who sees the Robotaxi as a key to unlocking substantial value for Tesla.

Affordable Models Strategy

Black also raised concerns about Tesla's strategy for affordable models. He suggested that the anticipated affordable model might be a "stripped-down Model Y priced lower and funded by lower costs rather than a new form factory that expands TAM." While a lower price point would inherently expand the total addressable market (TAM), Black fears this approach could lead to a repeat of 2023-2024, where price reductions supported by lower costs resulted in little to no incremental volume growth. This, he argues, increases the likelihood of further declines in FY'25 estimates.