Tesla Inc. has grown bigger than Toyota and Volkswagen combined thanks to a rally more befitting a technology stock than a car maker, and buying it now is probably a mistake for anyone but day traders, an analyst said Tuesday in downgrading the stock.

Risks to the valuation include the possibility a new Tesla model will cannibalize sales of an older one, and rising competition in the electric vehicle market in general, wrote Sanford C. Bernstein analyst Toni Sacconaghi. While Elon Musk’s company has recently executed well on its strategy, the stock’s 481% gain in the past year likely reflects more good news than is probably forthcoming, he said in a note to clients.

“Let us be clear: this is a valuation call,” Sacconaghi wrote, calling the market value “mind-boggling.” He lowered his rating to the equivalent of a sell from hold, and maintained his price target of $900, representing a 42% discount to Monday’s close. The shares fell as much as 4% to $1,477.60 on Tuesday.

Sacconaghi’s downgrade follows an advance that pushed the company’s valuation over $300 billion at one point, amid investor optimism about strong second-quarter results, a possible inclusion into the S&P 500 Index, and anticipation for new battery technology.

The analyst noted, however, that trying to predict Tesla’s stock direction in the near term could be a “fool’s game.”

“Expectations appear achievable/beatable, the forthcoming Battery Day could be noteworthy, and there is strong price momentum in both Tesla and among growth stocks more broadly,” the analyst said.

Sacconaghi said he would change his mind if Tesla ultimately demonstrates unique progress in autonomous driving or other software, leading to high margins over time.

The current valuation has led some investors to start valuing Tesla as if it were a technology stock. Sacconaghi noted its market value is now bigger than Toyota and Volkswagen combined, which collectively make 20 million cars every year, compared to Tesla’s expected 500,000 cars this year.

Separately, Tesla said in a regulatory filing early Tuesday that it has cleared out its balance of deferred revenue related to sales of regulatory credits to other automakers. Without the sale of credits to automakers that are out of compliance with emissions rules, Tesla wouldn’t have earned a profit last quarter.

Chief Financial Officer Zachary Kirkhorn said last week that while Tesla expects regulatory credit revenue to roughly double this year, it assumes those sales won’t make a significant contribution to the business in the future. Deferred revenue went to zero as of June 30, from $140 million at the end of the first quarter.

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