Is Tesla stock ready to explode? Big hedge fund dumps its shares in Elon Musk’s electric car company for troubled Boeing – just after entrepreneur became the 4th richest man in the world with $ 85 billion in fortune
- Coatue Management, a $ 11.4 billion investment firm, sold 42pc of its Tesla shares
- Coatue specializes in hedge funds that trade tech stocks and invest in tech
- The most recent holding, Q2, shows the sale of 224,893 shares in Elon Musk’s company
- At the same time, Coatue bought $ 504 million in Boeing stock
- Analysts say the move could indicate that Tesla is thought to be in trouble
- In May, Musk himself tweeted: ‘Tesla share price is too high imo’
An influential $ 11.4 billion hedge fund in New York has dumped a large portion of its shares in Tesla, instead of buying $ 504 million in Boeing stock.
Coatue Management, founded in 1999 by French financier Philippe Laffont, announced the decision in its filings in the second quarter.
The company, which includes mutual funds that trade tech stocks, and cars that invest in private tech companies and startups, sold 224,893 shares in Tesla, representing 42 percent of its holding.
It bought $ 504 million in Boeing stock. The move may come as a surprise at first.
Tesla shares have been on a longer rise in the U.S. stock market, with the company seeing a price increase of 760 percent in its price since that time last year.
Not even coronavirus-related shutdowns from their factories could dampen the rally.
Elon Musk’s company has seen its share price rise 760 percent in the last 12 months
Tesla’s success has seen Musk’s wealth rise to $ 85 billion – he is now the 5th richest man in the world
French-born financier Philippe Laffont’s fund has sold 42 percent of its Tesla shares
The rise in share price has seen Elon Musk, founder of Tesla and the largest shareholder, increase his wealth by about $ 7 billion, making him the fourth richest man in the world, according to Forbes, with a fortune of $ 85 billion.
Boeing, on the other hand, has seen its value plummet, thanks to both the crisis over the 737 Max and the pandemic stopping journey.
At the end of the first quarter, Boeing’s value was more than 70 percent lower than at this time last year.
Analysts said Coatue’s move could indicate that Tesla’s value has reached its peak.
In May, even Musk himself said the shares were too high.
Ryan Brinkman, head of JP Morgan of US auto research, said on July 23 that Tesla’s shares were ‘greatly overvalued’.
He continued: ‘While both technology and execution risk seem substantially less than previously feared, expansion to higher volume segments with lower price points seems to be loaded with greater risk relative to demand, execution and competition.’
On May 1, Elon Musk tweeted that the share price was ‘too high’, shocking investors
Tesla, which operates in China, could potentially cause problems as diplomacy between the world’s first and second-largest economies heats up and President Donald Trump offers taxes to U.S. companies that pull them out of the Asian powerhouse draw.
However, Boeing was considered a neutral perspective.
‘While we expect Boeing to emerge from the 737 MAX crisis and start generating money in 2021, the severity of COVID – 19’s impact on aircraft demand is unclear and we look forward to more confidence in the path ahead,’ said one JP Morgan analyst on July 30, quoted in Newsweek.
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