Barclays Analyst Still Says Tesla Is Headed To $165, Investors Buying Too Much Hype

Tesla Inc TSLA shares have been on fire this week, pushing to new all-time highs above $300 for the first time ever. However, for Barclays analyst Brian Johnson, the positive momentum is just more reason to dump Tesla stock.

On Thursday, Johnson issued a new note on Tesla reiterating Barclay’s Underweight rating and $165 price target.

According to Johnson, Tesla’s stock detached from market fundamentals a long time ago and now trades strictly based on the excitement that CEO Elon Musk can drum up.

“Much of the ‘cult- stock appeal around Tesla revolves around, in our view, the science fiction-like future envisioned by Tesla CEO Elon Musk,” Johnson explains. “Supported by Mr. Musk’s side ventures in rockets to Mars (SpaceX), hyperloops, advanced tunneling and now brain-computer implants, Tesla investors and car buyers are deeply attached to the notion that they’re not buying a regular financial instrument, but instead a ticket to the future.”

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Johnson says many of the common bull arguments for Tesla’s huge long-term potential are flawed. In the battery space, Johnson sees increasing competition and potential delays in reaching the $100/kWh cost level.

When it comes to autonomous driving, Johnson cautions investors not to assume that Tesla’s autopilot roll-out means it's ahead of the competition. Tesla may simply be willing to test its technology on customers while competitors are not.

Because of the difficulties Tesla will have in scaling its operations, supply constraints may allow rivals such as General Motors Company GM and Ford Motor Company F to beat Tesla to a large share of the electric vehicle market.

Despite seeing significant downside to Tesla shares, Johnson concedes that he sees no near-term catalyst to reverse the stock’s positive momentum.

Tesla shares are now up 40 percent year-to-date.