Tesla, Inc. TSLA CEO Elon Musk received huge compliments from Warren Buffett and Charlie Munger at Berkshire Hathaway, Inc.’s BRK BRK annual shareholders' meeting held over the weekend.
Tesla investor and fund manager Gary Black took to Twitter to weigh in on the comment and the reason why the famous investment duo of Buffett-Munger has stayed away from the electric vehicle company's stock.
What Happened: There is a huge difference between value and growth investors, said Black, adding that "Warren and Charlie want more certainty."
The duo's comments about Musk are a recognition that "Elon dreams big and succeeds in tackling impossible problems," the analyst said. "They are not comfortable taking that much risk," he added.
See Also: Best Electric Vehicle Stocks
Valuation A Pushback: When Berkshire invested in BYD Company Ltd. BYDDY BYDDF in 2008, it was selling at less than 15 times the estimated forward earnings per share, or EPS, Black said. He also noted that Apple, Inc. AAPL was trading at around 12 times forward EPS when Berkshire first invested in the stock in 2016.
"BRKA isn't going to pay 48 times 2023 EPS for $TSLA," the fund manager said. "BRKA doesn't buy growth stock until they get very cheap," he added.
Munger's comment that they don't want to compete against Elon and they don't want that much failure suggests they don't like taking that lot of risk when they invest, Black said.
"At 48x P/E stock has a lot of risk. Growth investors are willing to take that risk. Value investors don't," he added.
Tesla shares ended Friday's session 5.50% higher at $170.06, according to Benzinga Pro data.
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