A Swedish billionaire and hedge fund manager named Christer Gardell recently gave investors a dire warning: Tesla’s valuation is poised to crash — and soon.
What’s happening?
Teslarati shared the details of Gardell’s recent interview, which he conducted with finance news channel EFN.
While Tesla is currently valued in the hundreds of billions, Gardell opined that this number is overinflated and can’t hold forever.
“The valuation is incomprehensible,” he said.
And considering the controversy and corresponding plunge in sales as a result of CEO Elon Musk’s U.S. political involvement, Gardell said that a crash is almost certainly coming — possibly quite soon.
“Tesla, especially now with the whole Musk circus going on everywhere, is probably the most expensive stock on the global stock exchanges right now,” he said. “It could go down 95% – and maybe it should go down 95%.”
Watch now: These futuristic gas stations could completely change what it’s like to own an EV
When asked about the time period that he anticipated for these changes, Gardell said: “It’s always hard to say when. It could happen in a month, six months, a year, three years, or five years — it’s impossible to answer.”
Why does Tesla’s valuation matter?
Tesla has introduced both AI and robotics into its portfolio, Teslarati explains, but it is still primarily a car maker — which is part of the reason that Gardell warns its valuation is far too high. For context, the other top automakers have valuations less than one-third of Tesla’s, per Companies Market Cap.
A true market crash could cause a wave of ripple effects. If investors become wary of backing the future-facing sustainable technologies like the ones at Tesla’s, that could significantly hamper progress toward a cleaner future.
That said, the issues with Tesla’s sales numbers and valuation concerns are not rooted in its EV and battery tech being clean; in fact, that’s a big reason why the company has been successful and deserves a strong value. The bigger issues are rooted in the aforementioned controversies Musk is at the center of, among other factors one could consider more typical for a company to face, such as recent recalls.
Do you think Tesla’s vehicles have lost some of their appeal?
For some drivers — but not others
Click your choice to see results and speak your mind.
For consumers looking at buying a Tesla, volatile and plummeting stocks may not be all bad news.
Tesla has already been forced to adjust its financing and interest rates in order to entice buyers to move on their newer Cybertrucks, whose sales have been lagging. While Musk claimed that they would easily sell 500,000 units per year, so far sales are barely hitting 10% of that number. This may continue to lead to lowered prices and better financing deals not just at Tesla but potentially from competitors as well to keep up.
What should investors and consumers plan to do?
Globally, the electric vehicle market is still surging as buyers opt for the long-term affordability and ease of EV ownership. In fact, Q4 of 2024 saw a new record for EV sales set in the U.S., per data from Cox Automotive.
And fortunately for anyone looking to make the switch to an EV, there are plenty of affordable and reliable options from several other automakers, many of whom joined the EV race years ago to follow in Tesla’s footsteps. And they’ve seen success; while Tesla still holds a top-two spot among EV makers worldwide, per the Motley Fool, the competition is working hard to catch up.
For investors, Gardell advises, it may be wise to turn toward European stock markets instead. “The difference between American stocks and European stocks has never been greater,” he said.
Join our free newsletter for good news and useful tips, and don’t miss this cool list of easy ways to help yourself while helping the planet.
The post Billionaire hedge fund manager issues ominous warning about Tesla: ‘The valuation is incomprehensible’ appeared first on The Cool Down.
