Tesla stock (TSLA) may be a great play for some investors looking to tackle climate change, but not for all.
Count Christian Cooper, portfolio manager at Subversive Capital, in the latter camp.
“I have no interest in having Tesla, mostly on a valuation basis,” Cooper said on Yahoo Finance Live (video above) when asked if he was looking to add the EV maker’s stock to the firm’s new Subversive Decarbonization ETF (DKRB). The ETF invests in companies that support decarbonization efforts, such as those involved in battery technology or wind and solar networks.
“I think it’s [Tesla] well managed,” Cooper added. “I think their technology is great. On a valuation basis, I just can’t. As a portfolio manager, am I going to own Tesla at the expense of the entire rest of the automotive sector?”
Adding Tesla stock right now to the ETF would be a risky proposition anyway.
The stock has plunged around 65% year to date — and 36% in the past month alone — amid demand concerns and CEO Elon Musk’s unpredictable leadership at Twitter.
The past two weeks have brought news Tesla will offer $7,500 discounts on Model 3 and Model Y vehicles delivered in the U.S. in December — an unexpected development that further pressured the stock price. Meanwhile, reports have surfaced that Tesla is running lean production at its key Shanghai plant.
Investors haven’t taken that news positively either. A number of analysts have downgraded the stock in recent days on fears of a sharp 2023 demand slowdown.
Cooper thinks there are other risks not priced into Tesla’s stock here as well.
“I think there is a bit of a meme behavior there that, in my mind, is not justified,” he explained. “To get back to the China risk, I think this is not inconsequential going into 2023. And I think there are geopolitical risks that are not being priced into Tesla at the moment.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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