'Nothing Short Of Stupid,' Hedge Fund Manager Says Of Post-Split Gains In Apple And Tesla

Apple Inc. AAPL shares are up 6.1% and Tesla Inc TSLA shares have gained 10% this week after both companies implemented stock splits starting on Monday. The big post-split gains have many market experts scratching their heads, especially considering investors have known the splits were coming for weeks.

Seabreeze Partners President and Tesla short seller Doug Kass said Apple and Tesla making new highs following their splits “makes ZERO sense.” Kass recalled a story from when he was a child and was upset when he thought there would not be enough pizza for him because his family had cut an 18-inch pizza into just six slices rather than eight.

“This silliness, and embracing of post-split shares of Tesla and Apple, is nothing short of stupid – as I was many decades ago,” Kass said.

Tilson’s Take: In his daily newsletter on Tuesday, Whitney Tilson said certain tech stocks are starting to set off his “spidey sense” for recognizing market bubbles.

“Did Tesla report fabulous earnings? Win a major new contract? Announce it was entering a massive new market? No… The stock began trading after a 5-for-1 split that it announced three weeks ago,” Tilson said.

Tilson said today’s tech sector is extremely reminiscent of the dot com bubble. However, he also warned traders about the dangers of going short or selling stocks, even in the middle of a bubble. Tilson said today’s market reminds him more of early 1999 than the peak of the dot-com bubble in March 2000.

Benzinga’s Take: Just because stocks like Tesla and Apple may be temporarily caught in a market bubble isn’t a condemnation of the companies or their long-term growth outlooks. In the 15 years period following the bursting of the dot com bubble, Cisco Systems, Inc. CSCO nearly tripled its revenue and Microsoft Corporation MSFT more than quadrupled its revenue, yet neither stock had returned to its dot-com bubble peak.

Related Links:

Is Tesla Pulling Off A 'Business Miracle'?

What Tesla Investors Should Know Ahead Of Stock Split