AutoNation CEO Mike Jackson still isn't hopping on the Tesla stock bandwagon a day after the company beat Wall Street expectations and reported a milestone fourth consecutive quarter of profitability.
"The stock price is insane. The valuation is insane," Jackson said Thursday during CNBC's "Squawk Box."
Tesla co-founder and CEO Elon Musk has a "great brand" and "he's got good products," Jackson said. "But he has a business model that is still very dependent on the government."
Jackson mentioned the government paying for "sales incentives" as well as the company relying on the sale of regulatory carbon emissions credits to other automakers for revenue.
Tesla sold $428 million worth of regulatory credits to other automakers in the second quarter. But the company no longer benefits from government sales incentives. Tesla reached the limit on tax credits of up to $7,500 for consumers who purchase an all-electric vehicle last year.
Jackson said that if Musk were able to conduct Tesla's business without such programs, he would give the company more recognition: "If he's making money and doing all this without government support, I'd tip my hat. That would be impressive, but it's not there yet and it's got a ways to go."
Tesla's shares closed Wednesday at $1,592.33 with a market cap of $295.2 billion. The stock was down nearly 4% Thursday afternoon. The company became the most valued automaker in the world, topping Toyota Motor, at the beginning of July.
Late Wednesday, Tesla reported adjusted earnings per share for the second quarter of $2.18 versus an expected 3 cents, according to estimates compiled by Refinitiv. Tesla's revenue of $6.04 billion also bested expectations of $5.37 billion for the period. It reported a $104 million on a GAAP basis, which means it can now be considered for inclusion in the S&P 500 index.
AutoNation also significantly beat Wall Street's expectations in the second quarter. The country's largest auto retailer Thursday reported adjusted earnings per share of $1.41 verses an expected 37 cents, according to estimates compiled by Refinitiv. The company's revenue of $4.5 billion, down about 15%, also beat expectations of $4.08 billion.
Shares of the auto dealer giant were up 8.3% in afternoon trading. The company's market cap is more than $4 billion.