An analyst has warned that Tesla’s (NASDAQ: TSLA) growth may stall, citing concerns that the company’s valuation may no longer be sustainable.
According to Gary Black, Managing Partner at The Future Fund, Tesla’s stretched valuation and declining growth prospects are key reasons for concern. In an X post on May 31, he explained that these factors led his firm to exit its remaining position in the electric vehicle (EV) giant.
Although Tesla supporters criticized his decision, Black defended the move as grounded in long-term fundamentals rather than short-term market sentiment. He emphasized that his exit aligns with a disciplined investment strategy focused on intrinsic value rather than hype.
Looking ahead, Black sees Tesla’s growth potentially slowing as it integrates emerging technologies such as Robotaxis and the Optimus humanoid robot. In his view, the stock’s valuation has already outpaced its realistic upside.
“As our forecasts go out to 2029 and beyond, TSLA’s forward growth rate will degrade as Robotaxi and Optimus are included in the base. When an analyst opines about a P/E it’s usually to assess the P/E relative to the future growth rate from that point forward,” he said.
TSLA stock valuation concerns
Currently, Tesla trades at a forward price-to-earnings (P/E) ratio of 180x based on projected 2025 earnings—a level Black called unprecedented for a $1 trillion company.
He argued that such a high multiple is hard to justify without sustained and exceptional earnings growth. By comparison, forward P/Es for 2026 and 2029 are estimated at 120x and 45x, respectively, highlighting what he sees as a valuation imbalance.
One of Black’s main concerns is the projected slowdown in earnings. Wall Street has recently slashed Tesla’s earnings estimates for 2026 and 2028 by 25 to 40%, reflecting growing skepticism about the trajectory of its EV business, which remains Tesla’s primary profit driver.
Black stressed that true valuation should be based on the present value of all future cash flows, not just short-term results. Ignoring P/E ratios, he warned, shows a lack of discipline, particularly for institutional investors managing diversified portfolios.
TSLA stock price analysis
His concerns come as Tesla stock lost momentum in its most recent session, closing down over 3% at $346.46. Year-to-date, the stock is down nearly 9%.
More broadly, Tesla faces a challenging road ahead, grappling with declining sales and backlash tied to CEO Elon Musk’s political views. However, Musk’s recent exit from a government advisory role is being viewed by some as a potential catalyst for renewed growth.
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