Could Warren Buffett Finally Make A Bet On Tesla After Praising Elon Musk? Top Analyst Reacts By Benzinga

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Could Warren Buffett Finally Make A Bet On Tesla After Praising Elon Musk? Top Analyst Reacts

Published May 08, 2023 09:51 Updated May 08, 2023 11:10

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Could Warren Buffett Finally Make A Bet On Tesla After Praising Elon Musk? Top Analyst Reacts

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Benzinga - Tesla, Inc. (NASDAQ:TSLA) CEO Elon Musk received huge compliments from Warren Buffett and Charlie Munger at Berkshire Hathaway, Inc.’s (NYSE:BRK) (NYSE: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.

Valuation A Pushback: When Berkshire invested in BYD Company Ltd. (OTC:BYDDY) (OTC: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. (NASDAQ: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.

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

Read Next: Tesla Done With Price Cuts, Lordstown Endurance To Drive Into Oblivion, Fisker Ocean Makes Waves And More: Biggest EV Stories Of The Week

Image generated using AI via Midjourney

Read the original article on Benzinga

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