- Tesla’s stock soaring 300% in six months shows markets are messed up, VGI Partners says.
- “When a market cap of that size can go hyperbolic in a short period of time for no real reason, it is certainly symptomatic of an environment that is not normal,” the company’s portfolio manager said.
- The asset manager said he hadn’t shorted Tesla stock, however, because of the company’s huge potential customer base and its “billionaire genius” CEO, Elon Musk.
- VGI hasn’t bought shares, either, as the electric-car maker faces intense competition and an uncertain future.
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The astronomical rally is a sign markets are messed up, according to VGI Partners Global Investments, an Australia-based asset manager with nearly $1 billion invested across stocks such as Amazon, Spotify, and Mastercard.
“Do I think that this is an indication of euphoria or an indicator of a party where the punch bowl has been aggressively spiked later in the night?” Robert Luciano, VGI’s portfolio manager, asked rhetorically on an earnings call this week.
“It certainly feels like it,” he continued. “When a market cap of that size can go hyperbolic in a short period of time for no real reason, it is certainly symptomatic of an environment that is not normal.”
Luciano may be skeptical of Tesla’s rally, but he’s wary of betting against a company with a huge number of potential customers and a superrich brainiac CEO in Elon Musk.
“Tesla has multiple total addressable markets, and it’s founded and managed by a billionaire genius,” Luciano said. “We find that a highly difficult combination to short.”
He added that the multiple strands of Tesla’s business — electric vehicles, energy storage, solar panels — meant it could also be considered a “platform business” that was “highly scalable.”
Luciano also explained, however, why VGI didn’t own any Tesla shares either.
“At various points in time, the mathematics and the outlook for the business has made little sense to us,” he said, adding that fierce competition in electric vehicles and Tesla’s other business areas posed other risks.