Bill Gross: PIMCO Founder Says Elon Musk’s Tesla Is a Meme Stock
Elon Musk has long had a loyal following. Tesla shareholders, who have helped drive the company stock market star in the past five years.
But according to Bill Gross—aka the ‘Bond King’—this group of supporters is now little more than meme stock traders: retail investors following in the footsteps of people like RoaringKitty Will Boost GameStop The stock price rose to dizzying heights.
Electric Car Maker Tesla—Magnificent 7 Stock Comparison has significantly disrupted the auto industry in recent years—and viral stocks like GameStopBlackberry and AMC Theaters signal a broader trend in market behavior, according to Gross.
The bond fund billionaire, who founded investment management firm PIMCO in the 1970s, has joined the Musk-owned social media platform X to share my thoughts on Tuesday.
“Tesla behaves like a meme stock — fundamentals weaken, price action soars,” he wrote. “But then every other day there’s a new meme stock. Mostly pump and dump. tough. Zapp. And old favorite GME.”
Tesla did not immediately respond. Property of Request comments.
Tesla acts like a meme stock – weak fundamentals, soaring price.
But nowadays, every other day a new meme appears.
Mostly pump and dump.
Chewy. Zapp. And old favorite GME.
— Bill Gross (@real_bill_gross) July 9, 2024
The BYD problem
The electric car giant led by Musk is are facing some tough challenges, namely maintaining competitiveness as Cheaper, more attractive alternatives flood the market and ensure adequate supply of necessary parts continue production on a large scale.
In the first day of this monthAustin-based Tesla exceeded analysts’ expectations when Q2 announcement deliveries were around 444,000. This represents a 5% decline compared to last year, far exceeding expectations.
Tesla’s stock has been rising in the week or so since the earnings call, up about 14% at the time of writing.
However, despite the postponement Q2 Still, Musk and his team will have to keep an eye on Chinese automaker BYD.
In early July, the Shenzhen-based manufacturer reported a 21% increase in electric vehicle sales, according to Reuters calculations, equivalent to 426,039 vehicles sold from April to June.
Chinese manufacturers are increasingly accepted in Western markets and unlike Tesla not afraid of a little hype.
Take the sponsorship of the Euro football tournament this summer as an example, raising consumer awareness of the brand. cheaper entry point than US competitors.
Tesla has begun to cede its crown in recent years. Even record sales in 2023 won’t be enough for the Musk entity to beat Warren Buffett-backed BYD to secure the top spot in vehicle sales. as the year comes to an end.
In Q4 Tesla speak The company delivered 484,507 vehicles to customers globally from October to December, selling nearly 1.81 million vehicles in 2023, a remarkable growth of 38%.
On the other hand, BYD claimed the title of the world’s largest electric vehicle manufacturer that quarter when it announced that it ended the fourth quarter with a record 526,400 electric vehicles sold, delivering 1.59 million fully electric vehicles by 2023, a 73% increase year-on-year.
Likewise, according to auto research experts Kelley Blue Book (KBB), Tesla’s once-unshakeable market share position has declined in recent years.
Earlier this year, KBB reported that Tesla’s market share fell below 50% for the first time in the third quarter of 2023. It has decreased by 75% compared to 2022 and 62.4% by early 2023.
Tesla and AI
Another problem Tesla is facing is securing enough chips to power its technology—and Tesla isn’t the only company.
However, one factor that other businesses do not face is that the supply dedicated to one business is redistributed to another business.
Last month Musk was the richest person in the world with a net worth of $274 billion. according to Bloomberg Billionaires Indexadmitted to diverting Nvidia’s AI chip originally intended for Tesla to his latest startup xAI and social media company X.
“Tesla has nowhere to send Nvidia chips to turn them on, so they just sit in a warehouse,” he posted.
However, the fact that Musk has such vast resources may have been an attractive factor for Tesla shareholders who voted through his record-breaking pay package.
After all, he told analysts stop viewing the electric car maker as a car company and instead view it as a robotics or AI research company.
While analysts are not convinced—raising criticism overpromise and underdeliver while others has speculated Tesla should be removed from the Magnificent 7 stock list—the reality is still Model X makers are still in a fierce race to become the world’s largest electric car maker.
With a staggering 1,511% increase in its stock price over the past five years, the question is whether Tesla can afford to (figuratively) stay ahead in stock comparisons.
