6. Tesla Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders as of Q2: 85
Tesla, Inc. (NASDAQ:TSLA) is the pioneer of electric vehicles, enjoying a first-move advantage in refining its technology to the extent of delivering self-driving cars. While most automakers are interested in developing autonomous cars, Tesla has already made a mark by building an autonomous driving platform, called Full Self Driving, allowing it to ship millions of cars and generate billions in revenue and earnings.
Even though Tesla, Inc. (NASDAQ:TSLA) is active in other industries, such as solar energy and battery storage, its automobile division still generates more than 90% of its company’s revenue. According to several estimates, it has a 50%–80% market share.
Furthermore, EV demand is increasing even though projections have decreased, leaving the company in a solid position to generate long-term value. Domestic EV sales are now predicted to increase by more than 10% yearly over the next five years,
By 2029, EV sales are predicted to reach $1 trillion globally. This is encouraging since Tesla, Inc. (NASDAQ:TSLA) is expected to hold a 39.4% global market share, which is higher than the combined market shares of the next eight competitors.
Compared to its rivals, Tesla possesses greater capital, greater brand awareness, and greater manufacturing capacity. Furthermore, a number of traditional automakers are currently reversing their EV plans, which might enable the business to hold onto its leading position in the market for some time to come.
Tesla, Inc. (NASDAQ:TSLA)’s sales decreased in Q2 for the second time, following an 8.5% decline in the first quarter. However, that does not indicate that the company is in trouble. The EV giant is well positioned to bounce back amid the transition from fossil fuel cars as it also revamps its product line.
In July, Tesla, Inc. (NASDAQ:TSLA) ended a five-month losing streak with a 1.2% year-over-year increase in registrations. A significant portion of that gain came from the Cybertruck, a fantastic achievement, given that Tesla only produced 5,175 Cyber Trucks compared to 5,546 for all other electric pickups. In total, 85 hedge funds were long Tesla, Inc. (NASDAQ:TSLA) in the second quarter, with a total stake value of $4.9 billion.
ClearBridge Small Cap Value Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“The strength in the stock market adds significantly to that enormous transfer of wealth, which one could argue is good for shareholders. But is it causal? That is, did the stock market do well because CEOs got large stock grants? Are the CEOs just the lucky recipients of a windfall when the market goes up and their employees perform well? Or do they require huge grants to do their jobs that no one else could possibly do as effectively?
Tesla, Inc. (NASDAQ:TSLA), and most of its shareholders, certainly think the latter is true. In 2018, Tesla’s board of directors crafted a pay package for CEO Elon Musk that would award him 12 tranches of 10-year, fixed-price options on 1% of company stock for every $50 billion in market cap the stock added. In total, the options would be for 304 million shares of the company at $23.34 a share. He would receive no other compensation, until or unless the board decided otherwise. Shareholders approved that pay package, and the stock added all that market cap and more, giving Musk the right to buy 10% of the company for $50 billion less than it was worth, adding to his existing 13% stake. Minority shareholders sued, and a court sided with them and expunged the package in January 2024. “The process leading to the approval of Musk’s compensation plan was deeply flawed,” ruled Judge Kathaleen McCormik of the Delaware Court of Chancery as part of a 200-page decision. It seemed like a long-awaited check on excessive compensation to one individual for the achievements of an entire company….” (Click here to read the full article)
