Legendary Investor Bill Gross Says Tesla Stock Is Now a Meme. Be Warned.


  • Noted investor Bill Gross has raised some red flags regarding Tesla (TSLA).
  • The Bond King recently noted that it is currently “acting like a meme stock.”
  • Tesla stock’s current performance and poor fundamentals support this argument.
Tesla stock - Legendary Investor Bill Gross Says Tesla Stock Is Now a Meme. Be Warned.

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Is Tesla (NASDAQ:TSLA) the new meme stock? According to one investing expert, the answer could be yes.

Bill Gross, the founder of investment management firm PIMCO, recently spoke out against Tesla stock. A 40-year veteran of the financial sector, Gross is well known for his expertise in successfully navigating financial markets.

On Tuesday, he posted on X regarding TSLA stock and the problems he believes it faces. In a nutshell, Gross believes that Tesla has meme stock characteristics. It isn’t hard to see why.

Bill Gross Weighs In on Tesla Stock

This isn’t the first time that Tesla has been flagged as a meme stock. For years, it has been popular with retail investors, at least partially due to Elon Musk’s celebrity status. And over the past month, Tesla stock has risen more than 50%, delighting many investors.

But in Gross’ view, this may be cause for concern. On the afternoon of June 9, the noted investor posted the following to X:

Gross is correct on both counts. It’s true that Tesla shares have performed well recently. He’s also correct that the company’s fundamentals aren’t looking good, even after the company beat Wall Street estimates for Q2 deliveries.

As InvestorPlace contributor Marc Guberti reports:

“[In Q1] GAAP net income dipped by 55% year-over-year as Tesla had to lower its prices to keep up with competitors, especially in China. Tesla is losing market share in this critical market as Chinese EV makers rise to the occasion. Tesla stock has gained over 1,000% over the past five years and enjoyed a parabolic rise during the pandemic. However, a 51x P/E ratio is excessive for an automobile company with profit margins that resemble other car companies.”

It’s clear that Gross sees meme stock status as a negative attribute that should worry investors. This makes sense, given the well-documented history of troubled companies that gain popularity among retail investors only to crash and burn.

Keith Gill, known on social media as Roaring Kitty, is currently facing accusations that he orchestrated a pump-and-dump scheme in GameStop (NYSE:GME), the company that kicked off the meme stock craze in 2021. Gill also recently revealed a 6.6% stake in Chewy (NYSE:CHWY). But some of the pet care company’s executives have expressed concern about Gill’s investment, speculating that his reputation may put off other investors.

With that in mind, it makes sense that Gross would be dismissive of Tesla here.

Why It Matters

The problem with rallies built on superficial hype is that they often fizzle out as quickly as they began. When Gill unexpectedly returned to social media in May 2024 with a random X post, many meme stocks quickly surged, only to quickly come back to earth. Therefore, investors should regard Gross’ take on Tesla stock as a warning.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Samuel O’Brient is a Reporter for InvestorPlace, where his work focuses primarily on financial markets, global economic trends, and public policy. O’Brient writes a weekly column on recent political news that investors should be following.

Article printed from InvestorPlace Media, https://investorplace.com/2024/07/legendary-investor-bill-gross-says-tesla-stock-is-now-a-meme-be-warned/.

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