Tesla has biggest one-day gain since May 2013

Cornerstone Macro's Carter Worth looks at the Tesla chart. With CNBC's Brian Sullivan and the Fast Money traders, Steve Grasso, Karen Finerman, Dan Nathan and Guy Adami.

Shares of Tesla are roaring higher — but some are worried Elon Musk’s electric-car maker might be a speculative bubble that sometimes occurs in financial markets, especially near the end of bull markets.

Rising more than 110% in 2020 alone, some believe Tesla has become unmoored from its fundamentals, fueled by short covering and the fear of missing out among investors not holding the stock.

“Tesla has gone parabolic,” said Matt Maley, chief market strategist at Miller Tabak. “This is taking Tesla well above a level that would be supported by its current fundamentals. … The stock is going to get absolutely clobbered at some point before long.”

Tesla shares surged more than 13% on Tuesday, at one point trading above $900 for the first time, and analysts still can’t keep up with the run. The average 12-month price target of analysts is $493, according to FactSet. That new target, which is where analysts expect the stock to be a year from now, is more than 40% below where the stock closed on Tuesday.

“When the stock market bubble implodes, it will have been started by the surge in Tesla shares beyond speculative zeal,” former presidential candidate Ralph Nader wrote on Twitter last month amid the run.

Flashbacks

Some investors are seeing resemblance between the unstoppable enthusiasm over Tesla and the bitcoin bubble a few years ago. After bitcoin’s unprecedented run to nearly $20,000 a piece in 2017, the cryptocurrency crashed a whopping 65% in a span of just one month. By the end of 2018, bitcoin fell below $4,000, an 80% drop from its peak.

Others are getting flashbacks to the dot-com bubble in early 2000s, when internet stocks exploded and eventually collapsed, shedding nearly 80% of value within seven months.

In December 1999 before the bursting of the tech bubble, Amazon’s valuation hit more than 50 times its IPO price. Right now, Tesla is trading at about 98 times forward earnings, according to FactSet.


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