Fund Manager Substantially Reduces Tesla Holding, Citing 2 Reasons That Undermine His Positive View

Tesla, Inc. TSLA shares have seen significant weakness in recent sessions, with the near-term particularly worrying investors. A bullish fund manager on Friday confirmed that he the firm he runs has significantly trimmed its stake in the electric vehicle maker.

What Happened: Gary Black-run Future Fund’s flagship fund, The Future Fund Active ETF FFND, now holds 1,916 Tesla shares valued at about $342,293. Tesla accounted for 2.93% of the fund’s portfolio weighting, a significant reduction from the 5.07% weighting the stock held on Monday. From being the fourth-largest holding in FFND, the stock has dropped to 15th place currently.

One of Black’s followers on X asked him as to why he reduced his stake after his meeting with the Tesla management. The fund manager said earlier this week that he met with the Tesla IR in Austin on Tuesday. He also said that the consensus deliveries number for the fourth quarter was too high.

Black reiterated the same on Friday. “TSLA 1Q WS deliv ests remain too high (our est 425K vs WS at 474K). We expect TSLA 1Q and FY'24 deliv and EPS ests to fall further over next two weeks,” he said. Given high inventories, he also said he sees a moderate risk of additional Tesla price cuts.

See Also: Everything You Need To Know About Tesla Stock

Why It’s Important: In premarket trading on Friday, Tesla stock rose 0.32% to $179.23, according to Benzinga Pro data. This followed a 1.20% gain on Thursday. Ahead of that, the stock fell by a cumulative 12.9% over the first three sessions of the week.

If Black’s comments are anything to go by, the stock could see additional selling between now and the first-quarter deliveries release in early April. The only catalyst that could override the Tesla-specific sentiment in the interim is the Fed’s rate decision due on March 20.

Tesla’s problems are mostly self-inflicted, with even bullish analyst expressing disappointment over a lack of proper communication from the management. Investing in advertising, explaining the merits of an EV vis-a-vis ICE vehicles as well as quelling common concerns about EVs, could go a long way to reaccelerate EV adoption, with Tesla likely to be the biggest beneficiary, analysts, including Black say.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

Read Next: Tesla Bull Says EV Giant Is Going Through ‘Brutal Transition,’ Blames This For 80% Of Stock Sell-Off