Longtime investor Bill Gross has expressed concerns about Elon Musk’s Tesla, stating that the company is exhibiting characteristics of a speculative play among retail investors. He compared Tesla to meme stocks, highlighting sagging fundamentals and a sharp increase in price action.
Despite these concerns, Tesla has been on an impressive 10-day winning streak, experiencing a significant 43.6% increase since June 24. This surge was initially triggered by Tesla’s second-quarter vehicle production and delivery numbers, which surpassed analyst expectations.
Gross, a seasoned investor known for his influence in the U.S. bond market, questioned whether the strong delivery report was enough to justify Tesla’s remarkable performance. He drew parallels between Tesla and other meme stocks like Chewy, Zapp, and GameStop, suggesting a pattern of volatile behavior among these companies.
Gross specifically pointed out Chewy, which gained meme status after online personality Roaring Kitty purchased a significant stake in the pet retailer. He also alluded to his own involvement in trading GameStop and AMC options for quick profits, referring to them as “lottery ticket stocks.”
It is worth noting that despite Tesla’s recent rally, the stock is only up by approximately 6% year-to-date, significantly trailing behind the S&P 500, which has seen a 17% increase. This performance gap raises questions about the sustainability and long-term prospects of Tesla’s current trajectory.
While Tesla’s recent success may be impressive on the surface, seasoned investors like Bill Gross are raising red flags about the company’s behavior. The comparison to meme stocks and the lackluster year-to-date performance suggest that caution is warranted when evaluating Tesla’s stock. Investors should carefully analyze the underlying fundamentals and avoid being swayed by short-term price movements in the market.