‘Tesla could fall 90% tomorrow, and I wouldn’t buy a share’, says top 1% fund manager

A growing star in the small world of fund managers, David Giroux, has some harsh words for the current stock market and Tesla’s stock in particular.

He said he would not touch Tesla’s stock even if it dropped 90%.

Over the last few years, Giroux has become a prominent figure in the world of conservative investors.

His fund, T. Rowe Price Capital Appreciation, has an 11.9% annualized return – beating the S&P and litereally 99% of its competitors.

The success has led T. Rowe to give Giroux three more funds to manage recently.

In a roundtable with Barons, the portfolio manager warned about overvalued stocks and Tesla was at the top of his list:

“Tesla could fall 90% tomorrow, and I wouldn’t buy a share, because it’s just crazy overvalued Palantir, I wouldn’t buy a share—crazy overvalued. Costco Wholesale —[at a price of] 49 times earnings, Walmart, 37 times—doesn’t make any sense.”

Tesla’s stock currently trades at more than 200 times earnings, which have been in decline for two years now, and there’s no end to the deterioration in sight.

Despite those declining earnings, CEO Elon Musk has been claiming that the stock is on the verge of going 10x and “obliterate” those shorting the stock.

However, with Tesla’s EV business in decline, he himself admits that Tesla’s stock depends on solving autonomous driving and humanoid robots, and there’s no strong evidence that Tesla is leading in those fields.

Electrek’s Take

While I tend to agree with Giroux on this, Tesla’s stock trades on the fact that people are willing to overlook Elon Musk’s lies and misleading statements.

Given that many investors still have faith in him, it’s unclear how long Tesla can maintain a 200 P/E.

I certainly wouldn’t bet against it because of it.

However, I do worry. Tesla weighs heavily on the S&P and therefore, on many people’s 401k.

While many people still believe Musk, I think more and more people are realizing that he is not worthy of blind faith and might not be this techno savior that many still regard him as.

By launching Robotaxi before being ready, Musk also put a clock on Tesla to deliver and if it continues to fall behind Waymo, I could see more people having their “realization” moment with Musk.

That, combined with Tesla likely facing some terrible quarters due to increased competition in China and Europe, and an expected slow down of EV sales in the US starting in Q4, there’s a real possibility of a pullback.

There’s a real chance of Tesla could lead a market crash with the insane valuations we are seeing across the entire market.