US Markets
Wednesday, July 10th, 2024 1:02 pm EDT
Key Points
- Bill Gross, co-founder of Pimco, believes Tesla is behaving like a speculative “meme stock” with weak fundamentals but rapidly rising stock prices, similar to other pump-and-dump schemes.
- Tesla’s stock has surged 43.6% over a 10-day winning streak, primarily driven by better-than-expected second-quarter vehicle production and delivery numbers.
- Gross compares Tesla’s recent price action to that of Chewy and GameStop, noting that despite the surge, Tesla’s shares have only increased about 6% this year, lagging behind the S&P 500’s 17% gain.
Longtime investor Bill Gross has raised concerns about Tesla’s recent market behavior, likening it to a speculative play popular among retail investors. Gross, who co-founded Pimco and served as its chief investment officer, expressed his views in a post on social media platform X, stating that Tesla is acting like a “meme stock” with weak fundamentals but rapidly increasing stock prices. He noted that this trend of stocks behaving like meme stocks is becoming more common, often resulting in “pump and dump” schemes. Tesla’s impressive 10-day winning streak has seen its stock price soar by 43.6% since June 24, a surge initially driven by the company’s second-quarter vehicle production and delivery figures surpassing analysts’ expectations.
Despite the positive production and delivery report, Gross is skeptical about whether this alone justifies Tesla’s significant stock price increase. He draws comparisons between Tesla and other companies like Chewy, Zapp, and the once-popular GameStop. Chewy recently gained attention after Roaring Kitty, an online personality who was influential during the GameStop frenzy of 2021, purchased a substantial stake in the pet retailer. Gross himself has previously engaged in trading options for GameStop and AMC, referring to these as “lottery-ticket stocks” due to their speculative nature.
Even with the recent surge, Tesla’s shares are only up about 6% overall, underperforming compared to the S&P 500, which has gained 17% over the same period. This disparity further fuels Gross’s argument that Tesla’s recent price action is more reflective of speculative trading behavior than of its underlying fundamentals.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/07/10/bill-gross-says-tesla-is-the-new-meme-stock.html
