Musk is Tesla's greatest strength and weakness, says valuation expert

Pro Uncut: Aswath Damodaran & Colin Langan on Tesla
Pro Uncut: Aswath Damodaran & Colin Langan on Tesla

Tesla CEO Elon Musk is a visionary storyteller, but his company seems to struggle with turning its "dreams into numbers," one valuation expert told CNBC.

Speaking on Wednesday's "Halftime Report," NYU finance professor Aswath Damodaran called Tesla "the ultimate story stock." In other words, the company's value can "actually be different from the price for extended periods," he said.

He specifically called out Tesla's issues with execution as one reason for this disconnect. Critics of the automaker have frequently pointed toward its inability to keep up with demand.

"I think the allure of Tesla, and the danger of Tesla, is Elon Musk," Damodaran said. "Elon Musk has made the company what it is today. ... I think the reality is that Elon Musk is not as interested in execution as he is in telling you that big story."

Damodaran said that at around $225 a share, the stock is overvalued. Yet there are "pathways I can see for the stock to be a lot more," he said.

"That doesn't mean I am willing to bet on any of those pathways," he said.

A Tesla Model S on display at the Mall at Short Hills, New Jersey.
Adam Jeffery | CNBC

UBS analyst Colin Langan is likewise wary of Tesla shares. That's because a "story stock" typically relies on a bit of momentum, he told "Halftime Report." When looking at near-term catalysts that could move the company's shares higher, "we are very cautious," Langan said.

"The deliveries for the Model S have been coming down since [the fourth quarter]," he said, adding the automaker is having trouble ramping up production of the Model X.

Langan has a "sell" rating and $160 price target on the stock. A news report that the SEC is investigating Tesla for failing to disclose a fatal car crash before filing for a recent public offering were not a "critical component" of his rating, he said.

A Tesla representative told CNBC Monday that the company had not heard from the SEC yet regarding a potential investigation. The SEC declined to comment on the matter Tuesday.