Elon Musk has long enjoyed a loyal band of Tesla shareholders, who have helped boost the company to stock market stardom over the past five years.
However, according to Bill Gross—also dubbed the 'Bond King'—this band of backers are now little more than meme stock traders: the retail investors who followed the likes of RoaringKitty to push GameStop shares to dizzying heights.
The comparison between EV-maker Tesla—a Magnificent 7 stock that has significantly disrupted the automotive industry in recent years—and viral stocks like GameStop, Blackberry, and AMC Theaters signals a wider trend in market behavior, according to Gross.
The bond fund billionaire, who founded investment management firm PIMCO in the 1970s, took to Musk-owned social media platform X to share his thoughts Tuesday.
"Tesla acting like a meme stock — sagging fundamentals, straight up price action," he wrote. "But then there seems to be a new meme stock every other day now. Most are pump and dump. Chewy. Zapp. And old favorite GME."
Tesla did not immediately respond to Fortune's request for comment.
Tesla acting like a meme stock — sagging fundamentals, straight up price action.
— Bill Gross (@real_bill_gross) July 9, 2024
But then there seems to be a new meme stock every other day now.
Most are pump and dump.
Chewy. Zapp. And old favorite GME.
The BYD issue
The Musk-led electric vehicle behemoth is facing some tough challenges, namely staying competitive as cheaper, attractive alternatives flood the market and ensuring it has the supply of parts it needs to continue production at scale.
Earlier this month, Austin-based Tesla exceeded analysts' expectations when it announced Q2 deliveries of approximately 444,000. This represented a 5% drop from last year, which was ahead of expectations.
Tesla's shares have increased in the week or so since the earnings call, up approximately 14% at the time of writing.
However, despite the reprieve Q2 brought, Musk and his team will still be looking over their shoulders at Chinese automaker BYD.
In early July, the Shenzhen-based manufacturer announced a 21% rise in EV sales, which, per Reuters calculations, equates to 426,039 cars sold between April and June.
The Chinese manufacturer is increasingly being adopted in Western markets and unlike Tesla isn't afraid of a bit of advertising.
Take its sponsorship of the Euros soccer tournament in this summer, increasing consumers' awareness of the brand which has a cheaper entry point than its American rival.
Tesla has begun to concede crowns in recent years. Even record sales in 2023 were not enough for the Musk entity to beat off Warren Buffett-backed BYD to secure the top spot for vehicle sales as the year came to a close.
In Q4 Tesla said it delivered 484,507 cars to customers globally between October and December, selling nearly 1.81 million cars during 2023 for a very respectable gain of 38%.
BYD, on the other hand, cinched the title of the world's largest EV maker that quarter by announcing it finished the fourth quarter with a record 526,400 EVs sold, delivering 1.59 million fully electric vehicles in 2023 with a 73% gain over the previous year.
Likewise, Tesla's once seemingly unshakeable market share position has been declining in recent years, according to automotive research specialists Kelley Blue Book (KBB).
KBB reported earlier this year that in Q3 2023, Tesla's market share fell below 50% for the first time. It was down 75% from 2022 and 62.4% at the outset of 2023.
Tesla and AI
Another problem Tesla is facing is securing enough chips to power its technology—and it's not alone.
However, a factor other businesses don't have to contend with is the supply earmarked for one business being redistributed to another.
Last month Musk, the richest person on earth worth $274 billion per the Bloomberg Billionaire's Index, admitted to diverting Nvidia’s AI chips originally destined for Tesla to his latest startup xAI and social media company X.
“Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse,” he posted.
Yet the very fact Musk has such huge resources at his disposal may be a factor which holds some appeal for the Tesla shareholders who voted through his record-breaking pay package.
After all, he has told analysts to stop viewing the EV maker as an automotive company and instead value it like a robotics or AI venture.
While analysts are unconvinced—launching criticism of overpromising and underdelivering while others have speculated Tesla should be axed as a Magnificent 7 stock—the fact remains that the Model X maker is still in a neck-and-neck race to be the world's largest EV maker.
With its share price is up a staggering 1,511% over the past five years, the question remains as to whether Tesla has what it needs under the bonnet (metaphorically) to stay ahead of meme stock comparisons.
