“Don’t Sell a Share,” Says Billionaire Even as Tesla Stock Dips
When a billionaire makes a statement about his position regarding another billionaire’s company, it can be prudent to listen if you’d like to fatten your own wallet. In a CNBC interview, billionaire Chamath Palihapitiya spoke openly about Tesla and SpaceX founder and CEO Elon Musk, who was recently recognized as the richest person in the world.
Even with Tesla (NASDAQ: TSLA) stock down nearly nine points at close Thursday, Musk retains a net worth of $182.9 billion. His counterpart, Amazon and Blue Origin founder and CEO Jeff Bezos, is down to $182.8 billion, thanks to Amazon shares taking a 1.2% hit.
Palihapitiya’s opinion on Tesla stock? “Don’t sell a share.” He added that he believes the stock will double or triple in value.
What Palihapitiya finds most enticing, he revealed in the interview, is that Tesla is a distributed energy company before it is a car manufacturer, a sentiment Musk has previously shared. “People think of Tesla as an electric car company but the whole purpose of Tesla was to accelerate the advent of sustainable energy,” Musk stated during the 2016 unveiling of the Tesla solar roof.
In the CNBC interview, Palihapitiya said, “They are figuring out how to harness energy, how to store it and then how to use it in a way to allow humans to be productive.”
He finds it appropriate that Musk, with his eye on sustainability, took the role of richest person on earth. “The world’s richest person should be somebody that’s fixing and figuring out climate change,” Palihapitiya said.
Many in the Twitterverse agree with Palihapitiya’s hold call.
“Idk why anyone would even consider selling $TSLA any time soon with it’s Insanely superior product pipeline, innovation pace, etc. Tesla’s success is just beginning people! HODL,” tweeted Sawyer Merritt.
Many investors who spoke with GOBankingRates also agreed with Palihapitiya’s hold position on the EV and energy stock. “I’m a buy and hold, long-term-oriented investor and I do have a long position in Tesla,” said Steve Symington, lead advisor for 7investing.
At the same time, he agrees with Musk’s repeated comments that the stock may be overvalued. “There’s an argument to be made that it’s overheated at this stage. We’re talking about a company with a market capitalization at over $800 billion right now.”
Putting Tesla on the list of top 10 stocks he’d buy right now, although not at the top of the list, Symington points out the overall strength of the EV market. One report from Allied Market Research valued the global electric vehicle market at $162.34 billion in 2019, projecting growth up to $802.81 billion by 2027.
Of course, Tesla has more value propositions than “just” EVs. “There’s self-driving vehicle technology, which is a relatively high-margin add on,” said Symington, noting that battery storage and solar energy are two other significant elements of the company. “I think there are a lot of moving pieces and a lot of irons in the fire right now. I’m not personally adding to my position, but I certainly wouldn’t bet against it.”
He notes that if the stock dips by 20%, he’d consider increasing his position. “I wouldn’t be surprised by a pullback at this point, but I also wouldn’t be surprised if it continued to rise.”
However, some investors GOBankingRates spoke with took the opposite view regarding the company’s gains over the past six months and recent dips.
“I’d be trimming my position and capturing my gains in qualified accounts if I held the position for over the short-term gains period,” said Robb Novotny, a Marine veteran and financial planner who does not hold a long or short position in Tesla right now.
Even some Musk fans in the Twitter community decided to take some profits from their windfall of rising Tesla stock. “I sold 10% of my position at 700 and it paid for a renovation on our house,” said one Tesla shareholder.
Several planned to cash out their shares, or already did, to invest in the EV technology itself.
“I need to sell a lot of shares (but less every week) for my Model Y SR,” one prospective Tesla owner tweeted.
I need to sell a lot of shares (but less every week) for my Model Y SR – ähm, wait … LR … ok, wait: Performance and if I wait a bit longer with FSD included!
— Immo for Future (@icrfornax) January 15, 2021
Using Tesla stock to buy a Tesla could be perceived as a long-term investment in the future, and in living more sustainably by driving an electric vehicle. If you plan to pull profits to invest them back into a company’s products, timing the market is critical to make the most of your investment.
“I wouldn’t be surprised with some near-term volatility,” Symington said. “But there’s an argument to be made that this business is justifying its valuation, and I wouldn’t underestimate its ability to grow into it.”
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