As Tesla sees its shares fall drastically, investors begin to lose confidence. Several large investment funds are reducing their stake in the manufacturer’s shares, suggesting difficult times for the electric car giant
Is the Tesla bubble bursting? Despite remarkable sales scores last year (especially for the Model Y), the company’s glory days seem to be slipping further and further away every day. Since the start of 2024, Tesla shares have fallen 30%, and more than 50% since their peak in 2021, wiping about $600 billion from its market value. A worrying situation, especially on the part of shareholders; already subject to remuneration blackmail from Musk; who are starting to turn their backs on the company.
The great escape
The initial quarterly performances for the year 2024 have hardly convinced analysts, despite assurances from Elon Musk to soon launch new models at affordable prices in 2025. John Belton, portfolio manager at Gabelli Funds, did not could hide his concern: “ It seems that the fundamentals have started to detach themselves from reality “. In other words, Tesla’s stock market valuation, influenced by speculation and future promises, is no longer justified by the company’s actual and current performance. Gabelli Funds, which had collected 65,900 Tesla shares in 2022, liquidated all of its shares in the first quarter of 2024.
Far from being an isolated case, this distrust seems to be gaining ground. Among the 18 investment funds scrutinized by Morningstar, ten reduced their positions in Tesla shares last quarter, four of which reduced their stakes by more than 15%. Some, like Gerber Kawasaki Wealth & Investment Management, even sold a large part of their 500,000 shares this year, purchased more than 10 years ago.
Ross Gerber, partner at Gerber Kawasaki, gradually sold his shares: “ I think the story is over, that’s the best way to put it “. He also denounces Tesla’s internal management, pointing out a lack of resources allocated to public relations and Musk’s distractions by political and cultural subjects. Musk’s recent choice to prioritize xAI over Tesla is unlikely to help the situation.
A very cloudy horizon despite some support
Despite these headwinds, Tesla is not unanimously disavowed. Nineteen analysts followed by LSEG actually maintain a buy, or even strong buy, recommendation on the stock, two more than in February. The average target price established by 49 experts stands at $178.95, slightly higher than the current closing price. Proof that, although skeptical, some observers continue to believe in Tesla’s ability to rebound.
However, we must remain realistic, there is a smell of scorching. With competition that is getting tougher every day, sales that are stagnating and a severely damaged stock market valuation, uncertainty hovers over Tesla’s ability to preserve its pace of innovation and its efficient management of resources, at large. dam number of investors. “ We think the stock is strong when there are automaker fundamentals that justify the stock price “, underlined Belton, reflecting a widely shared concern.
If, not long ago, Tesla was still the synonym of unbridled growth and dozens of technological promises, we are no longer there. Regaining shareholder confidence in such a situation is almost impossible. The disconnect between Tesla’s economic fundamentals and its stock market valuation is now so wide that it is difficult to imagine how the manufacturer could get back on its feet.
Source : Reuters
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