Tesla Faces Double Whammy As Oil Hits $110 And Bond Yields Climb, Gary Black Says Fundamentals Unchanged But Stock Likely To Get 'Whacked'
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Tesla Inc. (NASDAQ:TSLA) shares face increased pressure as higher long-term interest rates and elevated oil prices make the electric vehicle maker especially vulnerable, institutional investor Gary Black said on Tuesday, warning that broader market forces are working against the stock even without a change in the company’s fundamentals.
Higher Rates Weigh On Tesla Valuation
The managing partner of The Future Fund LLC, wrote on X that "there's been no change in $TSLA fundamentals," but said that was precisely the problem. Tesla shares have fallen this year, though Black's stated 12% year-to-date decline differs from Benzinga Pro data, which shows the stock down 7.75%.
"When long-term int rates go higher, long-duration (high P/E names) get whacked the most mathematically," Black wrote. He said Tesla stock is likely to continue moving lower if Brent crude oil holds at $110 a barrel and the 10-year Treasury yield stays at 4.6%.
Black's argument centers on Tesla's valuation. He suggests that high-growth companies such as Tesla often trade as "long-duration" assets because investors expect much of their future cash flow years ahead. When bond yields rise, investors apply a higher discount rate to those future earnings, reducing their present value.
At the time of writing, Brent crude held near $111 per barrel on Wednesday after coming under pressure in the previous session, as investors assessed President Donald Trump's renewed threat to resume military strikes on Iran if it failed to accept US peace terms.
Black Points Investors Toward Cheaper Growth
The investor also pointed to what he called a valuation mismatch. He said Tesla trades at a forward price-to-earnings-to-growth ratio of 6.0, about triple the level of other megacap growth stocks. PEG compares a company's valuation with its expected earnings growth.
To reduce duration risk, Black said investors should consider less expensive growth names, including Nvidia Corp. (NASDAQ:NVDA), Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon.com Inc. (NASDAQ:AMZN), and Meta Platforms Inc. (NASDAQ:META). He said Tesla trades at about 211 times projected 2026 earnings, with 2026-30 earnings growth of 35%, compared with lower multiples for peers with 15% to 20% growth.
Tesla still has a consensus Buy rating and an average price target of $403.59 based on 32 analysts, according to Benzinga data. The highest target is $600 from Wedbush, while GLJ Research has the lowest at $24.86.
Critical Levels To Watch For
According to Benzinga Pro data, Tesla currently shows a mixed technical picture, with its price trading above the 20-day and 50-day simple moving averages (SMAs), suggesting some bullish momentum. However, the 100-day and 200-day SMAs are acting as resistance, suggesting that traders should be cautious as the stock navigates these critical levels.
The relative strength index (RSI) is at 60.95, in neutral territory, indicating that Tesla’s stock is neither overbought nor oversold at this moment. This level suggests there may still be room for upward movement, but traders should watch for signs of a shift in momentum.
Currently, the MACD is above its signal line, indicating bullish momentum for Tesla. This suggests that the stock may continue to see positive price action if this momentum holds.
Benzinga Edge Rankings show that Tesla stock scores well on the Growth and Quality metrics. It also offers a favorable price trend in the Short and Long Term.
Price Action: Tesla shares closed 1.43% lower at $404.11 at market close on Tuesday, rising 0.14% to $404.68 during the after-hours session.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo Courtesy: Sunil prajapati on Shutterstock.com