Renowned investor Bill Gross has expressed his concerns regarding the behavior of Tesla in the stock market. According to Gross, Tesla is exhibiting characteristics of a speculative play among retail investors, resembling what is commonly known as a meme stock.
Tesla has seen a remarkable 10-day winning streak, with shares surging by 43.6% since June 24th. This rally was initially fueled by the positive second-quarter vehicle production and deliveries numbers released by Tesla, which surpassed analyst expectations. Despite this, Gross questions whether these strong delivery numbers are enough to justify the substantial increase in Tesla’s stock price.
In his assessment, Gross draws parallels between Tesla and other meme stocks such as Chewy, Zapp, and GameStop. Chewy, a pet retailer, gained meme status after online personality Roaring Kitty purchased a significant stake in the company, similar to the GameStop mania of 2021. Gross himself has admitted to trading GameStop and AMC options for quick profits, referring to them as “lottery ticket stocks.”
Despite Tesla’s recent surge, the stock has only seen a modest 6% increase year-to-date, trailing behind the S&P 500, which has risen by 17%. This underperformance has led Gross to caution against viewing Tesla as a sound investment and raises concerns about the speculative nature of its current valuation. In a market environment where new meme stocks emerge frequently, Gross’s assessment serves as a reminder of the risks associated with chasing inflated stock prices based on hype and speculation.