Tesla Shares continued to move higher, completing a ninth straight session of gains on Monday. However, the strong rally has made analysts who are bearish on Tesla more uneasy about its rising valuation.

Tony Sacconaghi, an analyst at brokerage firm Bernstein, said in an interview that Tesla clearly benefited from better-than-expected delivery momentum in the second quarter, but it is worth noting that sales in the second quarter fell 5% year-on-year, while sales in the first quarter fell 9% year-on-year.

Sacconaghi said Tesla's stock is currently trading at 125 times earnings, adding that while the market is expecting things to improve, the situation is still not optimistic. The analyst believes that this momentum will continue until the robotaxi launch event scheduled for August 8.

“It’s a bit of a meme stock, frankly. The valuation is disconnected from the fundamentals,” Sacconaghi said, adding that the current share price assumes Tesla will earn $7 per share this year, but the consensus estimate is currently $2.

“It’s really an enthusiasm that things could get better and Tesla could say some really exciting things at its robotaxi launch event. But at the end of the day, stocks are measured on cash flow and future cash flow, and we’re just seeing a disconnect between earnings and cash flow in the company’s current stock price.”

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