Tesla shares remain ‘very cheap,’ investment advisor says

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Written on Feb 13, 2023

Reading time 3 minutes

Tesla stock remains 'very cheap', despite a strong start to 2023.
Future Fund Managing Partner Gary Black highlights a compelling valuation.
He notes Elon Musk's role as Twitter CEO are 'short-term' concerns that investors should 'ignore'.

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Tesla Inc (NASDAQ: TSLA) has become one of the most debated stocks among investeors and each side can point to recent performance to justify their case.

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Bulls will point to the 75%+ gain so far in 2023 as evidence of buying momentum and high expectations ahead. Bears, on the other hand, hold a clear advantage over a one-year timeframe in which Tesla shares are still sharply lower.

Most recently, Invezz reporter Wajeeh Khan covered Morgan Stanley analyst Adam Jonas who said the “window of opportunity on valuation has closed.” Taking the other side of the debate is Future Fund Managing Partner Gary Black who argues it is not too late to buy Tesla shares.

Tesla shares trade at an attractive valuation

Black was a guest on CNBC’s “Squawk on the Street” segment on Monday and explained why Tesla stock remains “very cheap” and should still be bought by investors. He argues there is a scarcity of mega-cap growth stocks offering 30% to 35% volume growth that trades at 40 times earnings.

Tesla stock is the “best way” to capitalize on growing electric vehicle demand, according to Black. He notes multiple catalysts in the coming weeks and months that will help Tesla hold on to its dominant market position. These include the FSD Beta V11 launch, expectations for a “blockbuster” first quarter, Megapack projects, and the Cybertruck launch. He said:

There’s so many catalysts, this reminds me very much of the end of 2019 as we were looking into 2020 with all the catalysts coming.

Musk leadership concerns are ‘short-term’

Tesla investors still have reason to be concerned with Elon Musk’s focus as Twitter CEO. But, Black argues this remains a “short-term” headwind as he will “give up” his CEO title at the social media company.

It is merely a matter of time before Musk finds a replacement CEO and investors should “ignore” that storyline as it is merely “noise” and distracts investors from the big picture.

The Cybertruck and Megapack project alone can contribute $1.50 in incremental earnings as soon as next year, according to Black. He concludes:

That’s about 25% of where the Street is today. That’s why you want to own Tesla – not because he will give up Twitter. He will give up Twitter. There is no question in my mind that that’s coming.