Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, has dramatically shifted his stance on Tesla, moving from a fervent supporter to a vocal critic. Gerber, an early investor in Tesla, has significantly reduced his fund’s holdings in the company since November. His reasons for this change of heart are rooted in concerns about Elon Musk’s erratic behavior on social media, the controversial revamp of Twitter, now known as X, and Musk’s involvement in political controversies.
Gerber, who initially invested in Tesla in 2013 after test-driving a Model S, has received numerous calls from clients seeking to sell their Tesla stock. These clients express a desire to distance themselves from Musk, reflecting a growing dissatisfaction with his leadership and the impact it has on the company’s image.
Despite the significant reduction in his holdings, Gerber still holds $60 million in Tesla shares, expressing a glimmer of hope for a turnaround. However, he has set a six-month deadline for Tesla to improve its performance. If the company fails to meet his expectations within this timeframe, he plans to exit his remaining Tesla stock entirely.
Gerber’s criticism stems from his perception that Musk’s chaotic online presence and involvement in legal battles have damaged Tesla’s brand. He previously attempted to address these issues by running for a seat on Tesla’s board in 2023, but his suggestions were largely ignored.
Gerber believes Tesla’s stock is currently overvalued, stating, “I see the stock as really overvalued right now because I don’t think they make any of their numbers.” With Tesla’s stock down 15% in 2024, he remains skeptical about its future performance and predicts a potential further drop of 15%.
He sees a future where other EV companies like Rivian Automotive Inc could surpass Tesla, suggesting their potential to scale production and lower prices. Gerber’s shift from a Tesla advocate to a critic is significant, considering his long-standing support for the company. In August, he sold approximately $60 million worth of Tesla shares, citing declining confidence in the company and lack of interest in its products. Although he still holds a $50 million stake, he doubts Tesla’s ability to meet its sales goals.
Tesla’s recent moves, including exploring Warner Bros. Studio for its robotaxi unveiling, indicate a focus on new ventures. However, critics argue that these initiatives are mere distractions, as Tesla’s core business grapples with challenges like declining margins and slower car sales growth. The removal of Musk’s “Secret Master Plan” from Tesla’s website, amidst his growing political controversies and evolving views on climate change, further raises questions about the company’s future direction.
Tesla’s stock closed at $214.11 on Friday, up 3.80% for the day. However, it slightly declined by 0.21% in after-hours trading. Year to date, Tesla’s stock has decreased by 13.81%.
