Gary Black's Future Fund Sells Remaining Tesla Stock, Reitrates $310 Price Target: 'TSLA's Valuation Has Become Disconnected...'

Future Fund's Managing Director, Gary Black, says the investment firm sold off the remainder of its Tesla Inc. (NASDAQ:TSLA) stocks.

What Happened: "We believe TSLA's valuation has become disconnected from underlying fundamentals," Black said in a post on social media platform X on Wednesday. This is the first time since 2021 that the firm does not hold any Tesla stock.

Black highlighted how the company's stock is overvalued, selling at a price-to-earnings ratio of 188% despite a -40% YTD decline in earnings estimates. He also highlighted how the firm estimates Tesla deliveries to decline by -12% YoY, rather than market estimates of -7%.

"We believe the risk/reward associated with the Austin robotaxi test remain asymmetrical to the downside," Black said, reiterating his earlier comments about the Robotaxi launch.

The investor also shared his concerns that the upcoming affordable model in Tesla's lineup would be a "stripped down Model Y" rather than a new form factor that could expand the automaker's total addressable market.

"This increases odds that FY'25 estimates decline further, risking a repeat of 2023-2024, when TSLA reduced EV prices supported by lower costs, and TSLA saw little or no incremental volume growth," Black said.

He then reiterated the $310 price target for Tesla stock based on his estimates of Tesla's 2030 volumes as well as $12 adjusted earnings per share for the company, before highlighting that the stock could reach a $600 value in 2030 with 25% growth in EPS between 2030-2040.

Why It Matters: Black's decision to sell his Tesla stock follows ARK Investment's Cathie Wood selling off over $5.6 million in Tesla shares. Wood had also dropped well over $9 million worth of the EV giant's stock despite CEO Elon Musk's commitment to the brand.

Wood isn't the only one who has recently dumped Tesla stock, as company insiders, including Musk's brother Kimbal Musk, who is a member of the Tesla board of directors, also sold off more than $31 million in Tesla shares.  

Elsewhere, other analysts like Gerber Kawasaki's Ross Gerber are still holding on to Tesla stocks. "We’ve continued lowering our exposure to tesla as we have over the last few years," he said before adding, “We are not exiting the position for many reasons.”

Despite experts and insiders selling off Tesla shares, the company is getting ready for the launch of its Robotaxi in Austin, for which the EV giant is reportedly targeting a June 12 date.

Tesla scores well on Momentum, Growth, and Quality metrics, but offers poor Value. For more such insights, sign up for Benzinga Edge today!

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