Tesl TSLA a’s billionaire cofounder and CEO Elon Musk saw his fortune fall $8.9 billion on Wednesday, as Tesla stock plunged following a bearish outlook from JPMorgan JPM analysts.
In a new report, the bank’s analysts warned investors not to add Tesla stock to their portfolios before it is added to the S&P 500 Index on December 21. Tesla shares are “not only overvalued, but dramatically so,” JPMorgan analyst Ryan Brinkman warned in his report, maintaining his longtime bearish stance on the electric-vehicle maker.
By market close, shares of Tesla were down by nearly 7%, lowering Musk’s net worth to $135.8 billion—enough to push him back to the number three spot on Forbes’ ranking of the world’s richest people. Just a day earlier, as Tesla’s stock rose following news of a $5 billion capital raise, Musk briefly overtook LVMH chairman Bernard Arnault to become the world’s second richest person. Arnault has now regained that title, adding $1 billion to his fortune on Wednesday, which now stands at$145.6 billion.
Although Brinkman raised his price target on Tesla to $90 from $80 thanks to the company’s latest capital raise, it is still one of the lowest price targets on Wall Street, and more than 80% below the stock’s current price of $604 per share. In his report, Brinkman notes that in the two years since December 2018, although Tesla shares have risen more than 800%, consensus expectations for Tesla’s earnings through 2024 have dropped. “Tesla’s multiple of earnings is very high in nominal terms for any company in any industry at any time in history,” the JPMorgan analysts concluded.
Tesla remains one of the most controversial stocks on Wall Street, with analysts evenly split: 36% recommend it as a “buy,” 31% give it a “hold” rating and 33% a “sell” rating, according to Bloomberg data.
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While Tesla shares fell on Wednesday and retreated from record highs earlier this week, the stock is still up more than 600% so far in 2020. The electric carmaker’s stock has been surging ever since news broke that the company will be added to the S&P 500 Index on December 21, rising by nearly 50% since S&P Global announced the move after the closing bell on November 16.
Musk owns around 21% of Tesla’s stock, plus a stake in private rocket company SpaceX. On Tuesday, reports emerged that Musk had moved his primary residence from California to Texas, which means that now the three richest people in the U.S.—Musk, Amazon AMZN CEO Jeff Bezos and Microsoft MSFT cofounder Bill Gates—all live in states that don’t collect state income tax.