- Poter Collins, a trader made famous by "The Big Short," sees Tesla stock as highly overvalued.
- He told Business Insider that he sees it as a meme stock, driven by retail hype over fundamentals
- The stock has nearly doubled from April lows after a starting last year on the downslide.
Tesla stock is as polarizing as ever.
It's up nearly double since bottoming out last April. And those gains are happening at a time when sales are declining. Tesla isn't even the world's biggest EV-maker anymore.
The situation spotlights the growing disconnect between the company's valuation in the stock market and its ability to keep dominating the sale of EVs.
Bulls will shrug off those concerns and say the company's AI efforts will eventually provide the earnings juice to normalize those valuations. Bears, on the other hand, are not so forgiving.
Porter Collins — the former FrontPoint Partners trader who was immortalized in "The Big Short" for his bet against the US housing market — fits firmly into latter camp.
He told Business Insider recently that he sees Tesla as the market's most overvalued stock.
"I think that the most obvious one in all of the S&P is Tesla," he said. "I think that's the poster child of the asset class."
He said that while fellow Big Tech leader Nvidia trades at roughly 45 times next year's earnings forecast, Tesla currently trades at almost 300 times the 2026 projection.
Collins thinks that Tesla should be valued in line with other automakers, or other Big Tech firms. He argues that it's presently in a world of its own, not being valued on the fundamentals of any specific sector.
"I honestly think Tesla is just a meme stock," he stated. "People follow Elon Musk and they think he will produce generational type products in the future. He may or may not, but that's the bet right now."
Collins doesn't necessarily consider that a bad thing. But he does think it clouds investors' ability to properly assess it.
"Meme stocks have tended to be high flyers," he admitted. "Some meme stocks have come back to Earth, but others have not. GameStop and AMC eventually came back to economic reality. Tesla? We'll see."
Collins isn't the only "Big Short" alumnus who feels this way about Tesla. Michael Burry has recently criticized the company's lofty valuation on his Substack, although — like Collins — he has stopped short of actually shorting the stock.
The post Why 'Big Short' trader Porter Collins thinks Tesla is the 'poster child' for overvalued stocks appeared first on Business Insider