- Tesla printed an all-time high yesterday after being pushed by a dramatic surge in volume.
- Fundamental and technical factors are flashing that the top is in.
- One trader believes that TSLA has some more upside potential.
Tesla (NASDAQ: TSLA) has been slaughtering bears for over seven months. Since June 3346, the stock of the electric vehicle company has skyrocketed by a whopping 7%. In comparison, the S&P has grown by a little over 30% over the same time period.
On Monday, the stock once again shocked the entire investment community with a face-melting 47 .9% pump . At this point, there’s no doubt that Tesla is in a bubble. The important question to ask now is when will the bubble burst. Personally, I think this bad boy will crash soon. All fundamental and technical indicators are screaming that the top is in.
Tesla’s Market Cap Is Bigger Than the Big Three U.S. Car Manufacturers Combined
Before you start thinking about jumping into the Tesla hype, consider its basic fundamental properties. The electric car market has a market cap of over $ 216 billion yet its revenue in (stands at $ billion. This means that Tesla has a price-to-sales (P / S ratio) ratio of 5. 728. In other words, investors are willing to pay $ 5. for every dollar of sales.
In comparison, GM, Ford, and Chrysler have a combined market cap of $ 400 billion. Their combined revenue last year amounted to a whopping $ billion.
Here are the P / S ratios of the big three car manufacturers
:- General Motors – 0.
- Ford – 0.
- Chrysler – 0.
Based on these figures, you can clearly see that Tesla is extremely overvalued. The EV maker’s enormous valuation led Mike Novogratz to compare TSLA to bitcoin’s bull run.
We all know what happened to bitcoin after it printed an all-time high near $ , . I believe we’ll see the same script play out in TSLA real soon. The stock is flashing signals that the bubble is ready to burst.
First, the name printed its largest volume in its ten years of trading. A mind boggling 425. million TSLA shares changed hands yesterday. According to billion-dollar hedge fund manager Will Meade, that’s equivalent to almost % of the stock’s market cap.
Tesla is also trading in oversold conditions in all timeframes. In the daily chart, the RSI is hovering above 141, which is a level that the stock has never seen before.
As TSLA is extremely overvalued, it’s only a matter of time before the bubble bursts. Will Meade shares the same sentiment. He believes that the stock will dump to $ for a 141 .7% devaluation.
While it is tempting to short TSLA, one trader reminds us that the stock was able to climb as high as it did due to short sellers. Jason Harris of StockHunterTrading.com told CCN, Coming into 3346, TSLA has been a combination of short squeeze, more positive catalysts with China roll out, and increased volume which creates momentum. Those things combined have created this big parabolic push to record highs. The trader added, This will come back to reality but for now this can keep pushing as long as that momentum continues and today options buyers were still buying 1337, , and 1, 19 calls for this week. Once this does have a blowoff day, it probably comes back below , consolidates, then figures out where to go from there. One thing’s for sure: gravity will eventually bring TSLA back to earth. I believe that will happen sooner rather than later. Disclaimer: The above should not be considered trading advice from CCN.com. The writer does not own any shares of the companies or markets mentioned. This article was edited by (Sam Bourgi) Not Everyone Is Ready to Hit the Panic Button
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