Tesla (NASDAQ:TSLA) Overvalued, Dropped by Key Fund

Tesla (NASDAQ:TSLA) Overvalued, Dropped by Key Fund

Tesla (NASDAQ:TSLA) Overvalued, Dropped by Key Fund


Tesla Inc. (NASDAQ:TSLA) is overvalued, according to a climate focused investment fund that has beaten 97% of its peers.

“We don’t see upside,” Thomas Sorensen, who manages the Nordea Global Climate and Environmental Fund, said in a recent interview . “What’s needed in cash flow generation to get to the current valuation — we don’t see that happening.”

“It’s going to be a race to the bottom for the whole industry,” he said. “In this big transition period, it’s very tough to point out the winners and the overall profitability of the sector. The risks are too high.”

With more and more climate-friendly products and services coming to market, investors are having a hard time valuing new technology. Tesla’s 60% share rise so far this year is testament to investor enthusiasm even as it reported losses in both the first and second quarter. But the turmoil created by the electric car’s rise that roiled traditional carmakers now means greater risk for all manufacturers.

Nordea’s $390-M fund, which had previously owned Tesla, now chooses to back suppliers, such as German chipmaker Infineon Technologies AG. And with a proprietary universe of 1,200 companies with a total market capitalization of over 5 trillion euro, the Copenhagen-based fund doesn’t feel it needs to stick to the big names.

Consumers that seek out products that have a positive impact on the environment and climate are starting to get “critical mass” in some markets, according to Mr. Sorensen. The fund’s latest investments in Symrise AG and Kerry Group Plc try to capture that trend for Green consumerism, he said.

 “It’s everywhere, affecting all areas of society and most value chains,” he said. “We find interesting solutions that are still underestimated in companies’ cash flow. The economic incentive argument is very important. Environmental incentive goes hand in hand with economic incentive. These two combined are powerful.”

Stay tuned…

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