1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 88
5-Year Share Price Gains as of January 6: 404.51%
Tesla, Inc. (NASDAQ:TSLA) is one of the best performing S&P 500 constituents over the last five years, with shares climbing nearly 405% as of January 6. Tesla, Inc. (NASDAQ:TSLA) trimmed prices in China on the Model Y and Model 3 for the second time in less than three months. The company also lowered prices in Japan, South Korea, and Australia in response to demand trends. Tesla is set to deliver more than 5 million vehicles by 2030.
On January 6, after Tesla, Inc. (NASDAQ:TSLA) announced “a relatively significant price cut” in China last night, Piper Sandler analyst Alexander Potter said he was “unsurprised” by the decision since he has been expecting this for many months. If Tesla, Inc. (NASDAQ:TSLA)’s China-related volume, mix, fixed costs, and input costs do not alter drastically, then this price cut could drive Tesla, Inc. (NASDAQ:TSLA)’s EPS downward by about 70c per share over a full year. He maintained an Overweight rating and a $340 price target on Tesla, Inc. (NASDAQ:TSLA) shares.
According to Insider Monkey’s data, 88 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA) at the end of September 2022, compared to 73 funds in the last quarter. Cathie Wood’s ARK Investment Management is a prominent stakeholder of the company, with 4 million shares worth $1 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Tesla, Inc. (NASDAQ:TSLA) was one of them. Here is what the fund said:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic; second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE, not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful. (click here to read more…)
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