SpaceX’s initial public offering in June did not yield the anticipated results, and it seems the company might face additional challenges, according to a seasoned investment manager. George Noble, a former manager at Fidelity Overseas Fund, has maintained a pessimistic outlook on SpaceX since before its IPO, and his skepticism extends to Tesla as well, both of which he considers “one of the best shorts in the market.”
Following SpaceX’s IPO, Noble speculated that the stock could potentially decrease by up to 50% by year’s end. He expressed concerns about SpaceX’s expedited entry into the Nasdaq 100, which led passive index funds to increase their holdings of the stock. Noble had previously raised concerns about this decision by Nasdaq.
According to Noble, “Grandma’s 401k now owns a $2 trillion company at roughly 90 times revenues. That’s outrageous,” as he mentioned to Business Insider.
He believes the valuation of both SpaceX and Tesla is inflated and is cautious about the narrative surrounding Elon Musk’s companies, as retail investor interest appears to be waning. This shift is a factor in why Noble sees these stocks as attractive short positions.
Noble’s approach to identifying short opportunities involves looking for stocks with high valuations, significant social media influence, and challenging macroeconomic conditions. This has led him to become even more skeptical of Tesla, a sentiment he first expressed in January when he referred to Tesla as the stock market’s biggest bubble. He noted a decline in Musk’s sway over investors, especially after Tesla’s Q2 profit miss.
“The shine’s wearing off. Tesla’s unchanged for five years. Earnings are collapsing,” Noble remarked, suggesting that the “Elon premium” that has historically elevated Tesla’s stock value is dissipating.
Noble further posited that both Tesla and SpaceX should be valued at approximately $30 per share, indicating a potential 91% decline for Tesla and a 79% drop for SpaceX.
