Analyst Who Called Tesla (TSLA) a 'Meme Stock' Says Its Valuation is 'Nonsensical'

Dan Levy, senior equity research analyst at Barclays, explained in a latest program on CNBC why he called Tesla Inc (NASDAQ:TSLA) a “meme stonk” in a latest note. Levy said Tesla’s valuation does not make sense and the stock is driven because of its massive following in retail investing circles.

“Well, there is more to the stock than the meme phenomenon. But the reality is, as we point out in the note, it is the, so to speak, OG meme stock. There is a very robust retail following driving it. In many ways, we’ve said the fundamentals just don’t matter. That’s why the stock trades at a nonsensical PE multiple, 180*26 earnings. Bitcoin is really the better comp. And then there are other technical factors driving it, including MAG 7 relative performance and option activity, which matter more than the typical fundamentals.”

Tesla’s recently reported strong Q3 deliveries, as expected, amid a temporary boost due to pull-forward demand due to the end of EV tax credits. Tesla’s latest announcement of cheap models failed to impress the market. It also shows Tesla is losing pricing power amid intense competition. Cheaper models are also expected to negatively impact its auto margins. In Europe, the new budget models will face intense competition from European and Chinese brands, which are already offering several models under or near $30,000.

In 2024, Tesla's global deliveries fell for the first time, while the company is expected to see another 10% this year, Reuters reported. China’s BYD recently reported a whopping 800% increase in UK sales and the company is beating Tesla in most of Europe.

Baron Focused Growth Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its second quarter 2025 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells electric vehicles (EVs), solar products, and energy storage solutions, while also developing advanced real-world AI technologies. Despite ongoing macroeconomic challenges and regulatory complexities, shares climbed after Tesla completed a limited commercial rollout of its highly anticipated robotaxi business in Austin—following more than a decade of development and billions of dollars in investment. This milestone signals a potentially transformative shift in the automotive industry and opens up a sizable new market beyond the company’s core operations. Investor sentiment also improved after Elon Musk stepped back from government-related engagements, boosting confidence in Tesla’s near-term execution. Tesla introduced a refreshed Model Y globally, featuring design and performance upgrades, and outlined plans to unveil new mass-market models starting next quarter. Meanwhile, the company is progressing toward scaling production of its humanoid robot, adding another dimension to its long-term growth story.”

While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.