'The punch bowl has been aggressively spiked': $1 billion asset manager sounds the alarm after Tesla's 30.. - Business Insider

REUTERS/Mike Blake

• Tesla's stock soaring 300% in six months shows markets are messed up, VGI Partners says.
• "When a market cap of that size can go hyperbolic in a short period of time for no real reason, it is certainly symptomatic of an environment that is not normal."
• However, the asset manager hasn't shorted Tesla stock because of its huge potential customer base and its "billionaire genius" CEO, Elon Musk.
• VGI hasn't bought shares either as the electric carmaker faces intense competition and an uncertain future.
• Visit Business Insider's homepage for more stories.

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Tesla's stock has skyrocketed more than 300% in six months, boosting the electric carmaker's market capitalization to about $160 billion.

The astronomical rally is a sign that markets are messed up, according to VGI Partners Global Investments, an Australia-based asset manager with nearly $1 billion invested across stocks such as Amazon, Spotify, and Mastercard.

"Do I think that this is an indication of euphoria or an indicator of a party where the punch bowl has been aggressively spiked later in the night?" Robert Luciano, VGI's portfolio manager, asked rhetorically on an earnings call this week.

"It certainly feels like it," he continued. "When a market cap of that size can go hyperbolic in a short period of time for no real reason, it is certainly symptomatic of an environment that is not normal."

Luciano may be skeptical of Tesla's rally, but he's wary of betting against a company with a huge number of potential customers and a super-rich, brainiac CEO in Elon Musk.

"Tesla has multiple total addressable markets and it's founded and managed by a billionaire genius," Luciano said. "We find that a highly difficult combination to short."

He added that the multiple strands of Tesla's business — electric vehicles, energy storage, solar panels — mean it could also be considered a "platform business" that is "highly scalable."

However, Luciano explained why VGI doesn't own any Tesla shares either.

"At various points in time, the mathematics and the outlook for the business has made little sense to us," he said. Fierce competition in electric vehicles and Tesla's other business areas poses another risk, he added.

Tesla's stock surge has boosted Musk's net worth by nearly $18 billion this year, vaulting him into the 20 wealthiest people in the world, according to the Bloomberg Billionaires Index.

The polarizing executive has been celebrating the run up, despite using a Warren Buffett analogy to dismiss the stock price as a "distraction" last year.

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2020-02-05 11:15:32Z
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