Cathie Wood is a long-time Tesla (Nasdaq:TSLA) bull and a supporter of Elon Musk. She has fiercely defended Musk’s $1 trillion (£747.2 billion) pay package, and even said he is the ‘Thomas Edison of our age.’
She has even forecast that Tesla stock will reach $2,600 (£1,942) per share in five years, and predicted that the company is likely to produce a million Optimus robots annually by 2030.
‘He accomplished those expectations two years earlier than we expected him to,’ Wood said, adding that Tesla’s earnings have grown over 40% on average.
‘It is a win-win for all of us if Elon succeeds this time around the way he did the last time,’ she said.
The hedge fund manager believes in Musk’s vision of electric vehicles and space travel, but her hedge fund, Ark Invest, recently trimmed its stake in the company, amid analyst concerns over its valuation. The hedge fund sold close to $1 million (£747,250) worth of the EV stock.
Morgan Stanley Downgrades Tesla
Morgan Stanley’s Andrew Percoco downgraded Tesla stock to ‘equalweight’ from ‘overweight’ and adjusted his 12-month price target to $425 (£317.58) per share from $410 (£306.37), implying a 3% potential downside from Monday’s trading levels.
The analyst believes Tesla will continue advancing key initiatives, particularly in full self-driving and robotic technology. However, investors should wait for a better entry point, as the stock price remains highly valued and the company could face more headwinds amid lower demand for EVs, Percoco noted, adding that the brokerage lowered its outlook specifically for Tesla’s auto business.
‘This [downgrade] is a reflection of lower volume expectations, with a 10.5% reduction in 2026 volumes and an 18.5% reduction in cumulative deliveries through 2040 due to our more cautious view on the pace of EV adoption in the US coupled with growing competition in global markets,’ the analyst noted.
Morgan Stanley Downgrade Follows Michael Burry’s Valuation Concerns
The Big Short’s Michael Burry recently voiced his concerns over Tesla, describing the EV maker as a ‘ridiculously overvalued’ company.
‘Tesla’s market capitalisation is ridiculously overvalued today and has been for a good long time,’ Burry wrote on Substack.
Burry is known for betting against the real estate market in the 2008 crash, which is often described as one of the most profitable trades in history.
Burry’s views focused on what he calls the ‘tragic algebra’ of stock-based compensation, citing Tesla as an example. He explained that Tesla dilutes its stock by around 3.6% every year, but the company has yet to implement share repurchases to offset this dilution.
Burry also commented on Tesla’s frequent pivots across various tech sectors. ‘As an aside, the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.’
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Originally published on IBTimes UK