Electric carmaker Tesla would see its shares plunge with increasing interest rates following the coronavirus crisis, according to Lansdowne Partners fund manager Per Lekander, who spoke to CNBC.
The Fund Manager Says Tesla Shares To Fall.
Lekander told CNBC’s “Squawk Box Europe” Tuesday that he thought Tesla was in a bubble and that he was on the company, meaning he stood to profit if the value of Tesla’s stock were to fall.
Tesla’s market value rocketed to more than $800 billion in the 12 months leading up to January, before falling to $600 billion in February. It now stood at around $679 billion.
Lekander added his take was that the year would see the incumbents make a comeback as he called out Volkswagen, the German carmaker Volkswagen, valued at 119 billion euros ($141 billion), as one company on which he had an especially bullish outlook.
He said there were a few golden nuggets, which he thought would turn out to be winners in the long term, but over the short term, his guess if he was right on the macro call that as interests rates rose and the market woke up to (the fact that) the incumbents were not in the bad position as they thought, then yes, he thought Tesla was going down.
His prediction would likely find few takers, and market watchers generally would find it difficult to believe. According to Wedbush analyst Dan Ives, for instance, Tesla’s shares would recover following the volatility at the opening of the year.
In a note on Monday, he wrote that the success of Tesla ramping its EV (electric vehicle) initiatives and demand in China for the month of March would catalyze shares higher following a wobbly January and a robust month of February.
A CNBC request for comment from Tesla was not responded to by the company.
Lekander compared the Tesla situation to the dot-com boom of 1999.
He said if one thought about the visionaries who visualized the internet in 1999, if one listened to them, they were actually underestimating what happened, and the development was even more radical than what happened.
He pointed out that Cisco, that period’s poster child had a much higher market value today than it had in 2000. He added it did not stop it from going down 80% first.
Cisco’s equivalent in Europe was probably Nokia, Lekander added, saying that it too went down 80%.
He added he thought that was what people would see in the US in the tech space hype space.
The share price of Tesla shot by more than 650% in 2020 as several key events helped to lift the company’s stock.
The electric car maker started production at its California factory in May after a shutdown due to the pandemic as also a legal battle with the state. The company went on to post its fourth straight quarter of profit in July and beating delivery estimates. Shares also received a boost at the end of the summer with the announcement of its first-ever stock split.
Tesla shares shot to a record high in December, following the electric car maker’s announcement that it was debuting the S&P 500. However, when in January, with the company missing on earnings for its fourth quarter, the stock was down 5%.
The company, in February, revealed that it had bought $1.5 billion worth of bitcoin. According to tech research firm Wedbush, Tesla had already made a $1.2 billion profit on its investment.
Meanwhile, Musk, who the company officially gave the title of Technoking of Tesla on Monday, would retain his position as chief officer, the company said.