The latest Musk-Trump feud is a 'nail in the coffin' moment for Tesla, investor Ross Gerber says

Longtime Tesla investor Ross Gerber has significantly reduced his firm's and his personal stake in the company, citing Elon Musk's ongoing public feud with Donald Trump as a critical negative factor exacerbating existing challenges. This comes amid Tesla's weak Q2 vehicle deliveries, down 14% year-over-year, a 22% year-to-date stock decline, and concerns over its 150x earnings valuation compared to industry peers. Gerber, whose firm sold its ETF position, views the situation as a "nail in the coffin" for the EV maker, suggesting the stock could fall 50% due to these compounding issues and uncertainties in core auto sales and future initiatives like robotaxis.

Analysis

A high-profile, longtime Tesla bull, Ross Gerber of Gerber-Kawasaki Wealth Management, has articulated a strongly bearish case, citing a confluence of fundamental, valuation, and governance risks. Gerber frames Elon Musk's public feud with Donald Trump as a critical negative catalyst, or a "nail in the coffin," that exacerbates existing operational headwinds. This comes as Tesla reports a 14% year-over-year drop in Q2 vehicle deliveries and a 45% plunge in European Union sales from January to May. The stock's performance, down 22% year-to-date, reflects these challenges. Gerber argues Tesla's valuation is unsustainable, with a price-to-earnings ratio of approximately 150x, which is three to four times that of mega-cap tech peers like Nvidia and Google. He dismisses the justification for this premium, labeling future growth drivers like robotaxis as non-functional and disconnected from reality. His firm has acted on this conviction by liquidating its ETF position in Tesla and significantly reducing its overall exposure, signaling a potential 50% downside for the stock if a market revaluation occurs.

Key Decisions for Investors

• Investors should closely monitor the escalating CEO-related risk, as Elon Musk's political feud is presented as a direct threat to the company's stability and a distraction from core operations.
• Re-evaluate exposure to Tesla in light of its 150x P/E ratio, especially given the fundamental deterioration indicated by a 14% YoY decline in Q2 deliveries and weakening European demand.
• Consider the commentary from a historically bullish investor now actively selling as a significant negative signal, potentially prompting a review of long positions or the implementation of hedging strategies.
• Place greater scrutiny on the tangible progress of future growth initiatives like robotaxis, as their perceived lack of viability is a core tenet of the bearish argument against the stock's current valuation.