- Tesla's sizzling rally won't last forever due to old-guard rivals like Ford producing more EVs, according to one analyst.
- The tech giant's shares have soared 109% in 2023 thanks to a breakneck rally since late April.
- But some of Wall Street's biggest names – including Goldman Sachs and Morgan Stanley – are warning the stock now looks overvalued.
Tesla's biggest stock rally since 2020 could soon come to a grinding halt as investors realize the sheer level of competition it'll face in the electric vehicle space, according to one analyst.
ROTH Capital Partners' Craig Irwin said Thursday he's skeptical that the Elon Musk-led tech giant will be able to maintain its current share price over the longer term, with traditional automakers like Ford and GM ramping up their EV output.
"I've maintained my long-term bear stance," he told Yahoo Finance. "It's a great company, they played a huge role in transforming transportation, but you've got 100 new EVs coming to market."
"These big names – Ford and General Motors – there's lots of old guard that's coming in with pretty compelling vehicles that I think is going to compete effectively and make it harder for Tesla to see the growth and the margins they've been achieving going forward."
Tesla's stock has soared 109% in 2023, on track for the biggest six-month gain since 2020. The shares have benefited from both an AI-fueled rally in broader Big Tech names and investors' perception that CEO Musk has had a renewed focus on growing the EV company since he hired Linda Yaccarino to run Twitter, which he also owns.
But Goldman Sachs, Morgan Stanley, and Barclays have all called for investors to take some profits from that rally over the past fortnight, slashing their ratings of the stock from "buy" to "hold".
"I look at Tesla, I say it's egregiously overvalued," Irwin said.
Even the AI trade, which has helped mega-cap tech stocks stage a massive rally in 2023, is unlikely to keep Tesla's stock price at its current level, according to the analyst – because the EV maker's much-vaunted self-driving technology is still years from actually juicing up its earnings.
"It's beautiful that they're pushing hard to develop the technology – I just think that others will be more careful in introducing things to the market," Irwin told Yahoo.
"And Tesla's going to make other people go faster – but the profit opportunity from this AI I think is much more limited for Tesla, at least at the moment," he added.
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