Kevin O'Leary: 'When Tesla Falls Out Of Favor, Grown Men Will Weep'

Loading...
Loading...

Analysts at Deutsche Bank downgraded Tesla Motors Inc TSLA to Hold from a Buy on Tuesday, but raised their price target to $280 from $245.


Kevin O'Leary, founder of O'Leary Financial Group, was on CNBC recently to discuss this downgrade and his outlook for Tesla.


Crazy Multiples


"I think the problem with this name and it's going to remain so for quite a while now is people are going to start to judge it against the metrics of the auto industry," O'Leary said. "Why should it remain so special at such a crazy multiple in perpetuity when at the end of the day this company makes a car. That's what it is, it is a car and it's going to compete with all the other cars made by all the other manufacturers all around the world."


He continued, "Listen, I love the entrepreneurial spirit of this company. I applaud what they have done in advancing technologies. But at the end of the day, this car takes you from A to B. It's a car. So, why should I pay a crazy multiple for a car that takes [me] from A to B."

 

'Grown Men Will Weep'


O'Leary highlighted the volatility in Tesla's stock since last year, saying, "The volatility on this name is going to remain as people like you and I debate the merits of paying a crazy price for a stock that I remind you now does not pay any capital back to its shareholders - zero dividend, no cushion. When this thing falls out of favor and all of a sudden it's going to trade at the same P/Es as all of its competitors, grown men will weep."

Loading...
Loading...
Posted In: CNBCMedia
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...