The hits have certainly kept coming for Tesla over the last 6 months: first Elon Musk buys Twitter and starts dedicating a large portion of his time to fixing the platform. Then, questions arise about the sustainability of demand for Tesla after the company slows production at its Shanghai plant. Just days ago, the company cut prices in China for the second time in three months, inciting protests at their showrooms.
All the while, Tesla stock has been plunging – from 52 week highs near $384 per share to where it closed on Friday, at about $113 per share. But despite the seemingly neverending stream of negative news for the EV making, the nearly 70% drop from highs is making it look like a buy – at least, that’s what Barron’s thinks.
On Friday Barron’s listed Tesla’s as a growth investing stock pick, saying Tesla’s “battered stock looks like a buy again”. “Demand is slowing. Costs are rising. Elon Musk is distracted and a distraction. It’s time to buy the stock,” they wrote.
Just a day prior, the publication had featured the take of Dave Bujnowski of Baillie Gifford, who co-manages the firm’s U.S.equity growth portfolio. Baillie Gifford have been long-term Tesla bulls and, despite Bujnowski’s U.S. fund falling more than 50% last year, he is “unflinching” on his stance that his company is taking the right approach to long-term bets – including their position in Tesla.
He told Barron’s about EVs: “Electric vehicles are a great example of a disruptive growth engine inside a system that isn’t necessarily growing. A new type of supply enters the market and meets demand in a new and better way. They are stealing market share from combustion-engine vehicles. We’re believers in EVs. There’s a $4 trillion market globally, with a new product, and buyers finding more reasons to own them. EVs have gone from about 1% of the market in 2016 to 10%-12% now.”
Talking about Tesla, he noted that the firm is still “enthusiastic” on the name: “We are still enthusiastic about Tesla. A few years ago, the debate was whether Tesla could ever make money. They’ve proven they can. Now, the questions are around [CEO Elon] Musk and his involvement in Twitter and his lower engagement with Tesla.”
“I’m relatively relaxed about his engagement level with Tesla, for two reasons. One is that he’s always had multiple big endeavors, and has shown he has the capacity to do more than one job. More important than that is the culture he has created at Tesla—a culture of innovation, of being able to build this manufacturing machine that can produce cars at scale like no one else can. The company can basically run itself day to day without Elon.”
He concluded that he didn’t see Musk’s behavior as risk for Tesla’s potential market going forward: “We’re being watchful. For every person who says they don’t want a Tesla because of Elon’s behavior, it shrinks the addressable market by one. And that shouldn’t be overlooked. On the other side of the debate—and this is why we are still enthusiastic about Tesla—this is an absolutely massive market.”