Tesla stock "is overvalued," Damodaran said. "With story stocks, the value can actually be different from the price for extended periods."
He added, "The allure of Tesla and the danger of Tesla is Elon Musk. Elon Musk has made the company what it is today ... but I think he is the biggest weakness of the company. I think he's a great storyteller, but if you look at Tesla's lifetime, it always had trouble on execution. And I think the reality is Elon Musk is not as interested in execution as he is in telling you the big story."
Damodaran is professor of finance at New York University Stern School of Business. Previously, he taught finance at the University of California, Berkeley.
To watch the broadcast interview in its entirety, you must be a CNBC PRO subscriber.