NEW YORK (TheStreet) -- Tesla (TSLA) - Get Tesla Inc Report will eventually succumb to gravity's pull because it's revenue stream lacks diversity, O'Shares ETF's Chairman Kevin O'Leary said on CNBC's "Halftime Report" on Thursday afternoon.
"Tesla makes a car. One thing. Cars. And why it can defy gravity and perpetuity is beyond me," O'Leary said.
The people who own Tesla stock are "young buckaroos" at his firm because "it's part of their culture" and they all want to own a Tesla car eventually, he noted.
O'Leary tells the young guys that car companies trade at reasonable multiples while Tesla doesn't, but they don't care.
"What we need is to give them the lesson they deserve because all of these young guys have never faced the downside of a stock that collapsed 30% to 40%. It's coming, and then big daddy will be right. Right now they're smiling and laughing at me. They've made money off of this thing. It defys gravity," he said.
O'Leary and his firm "don't touch [Tesla stock] with any of our mandates," he added. "My reasoning for that is this one day gravity will strike on multiple."
Not only does Tesla only have one product to offer, but it also has up and coming rivals like BMW (BMW) that have equal or better versions of its one product, he said. On the other hand, Amazon (AMZN) has been able to defy gravity for a decade because it has a "tremendously diverse platform of income," he noted.
For the 2016 third quarter, Tesla reported earnings of 71 cents per share, beating estimates of a loss of 54 cents per share. Revenue came in at $2.30 billion, topping expectations of $1.98 billion.
Shares of Tesla were higher in early afternoon trading on Thursday.
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Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings team rates Tesla as a Sell with a ratings score of D+. This is driven by several weaknesses, which the team believes should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks the team covers.
You can view the full analysis from the report here: TSLA