Renowned investor Bill Gross has voiced his concerns regarding Tesla’s recent behavior in the market. He believes that Tesla is starting to exhibit traits of a speculative play among retail investors, comparing it to a meme stock with sagging fundamentals and volatile price action.
Despite concerns raised by Gross, Tesla has been on a remarkable winning streak, experiencing a 10-day rally that has seen its stock price surge by an astounding 43.6% since June 24. This impressive performance was initially triggered by the company’s second-quarter vehicle production and delivery numbers, which exceeded analyst expectations.
Questionable Justification
Gross, who was once a prominent figure in the U.S. bond market, has cast doubt on whether Tesla’s strong delivery report justifies such a significant increase in its stock price. He compared Tesla to other meme stocks like Chewy, Zapp, and GameStop, highlighting the concerning trend of pump and dump schemes in the market.
Meme Stock Comparison
Gross drew parallels between Tesla and other meme stocks, such as Chewy, which gained meme status after online personality Roaring Kitty bought a significant stake in the pet retailer. Gross himself admitted to dabbling in trading GameStop and AMC options for quick profits, labeling them as “lottery ticket stocks.”
Despite its recent surge, Tesla’s year-to-date performance still lags behind the broader market, with shares up only about 6% compared to the S&P 500’s gain of 17%. This discrepancy suggests that while Tesla may be experiencing short-term gains, its long-term sustainability and underlying fundamentals are being called into question by seasoned investors like Bill Gross.
The current behavior of Tesla in the market has raised concerns among investors, with Bill Gross highlighting the speculative nature of the stock and comparing it to volatile meme stocks. While Tesla’s recent rally is impressive, questions remain about the sustainability of its performance and whether it is justified by fundamental factors. Investors are advised to exercise caution and conduct thorough research before making investment decisions in volatile market conditions.