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Billionaire Sold Tesla And Buying This Stock That Could Soar 60% According to a Wall Street Expert

Omor Ibne Ehsan

Published: January 22, 2025 10:23 am

A lot of eyes are on Tesla (NASDAQ: TSLA) after Trump’s inauguration. In his inauguration speech, one thing that was pretty notable was him saying people should be allowed to drive whatever car they want. Nothing wrong with that statement, but I think that is a signal that EV tax credits and subsidies could come to an end under his administration. This is despite the fact that Elon Musk has been pretty crucial in Trump’s campaign.

24/7 Wall St. Key Points:

• Tesla has popped after Trump’s election victory due to Elon Musk’s affiliation with him.
• Even then, Trump doesn’t seem to be flattered enough to back down from his earlier promise of getting rid of EV subsidies.
• Elon Musk doesn’t seem to care and many major investors are deciding to take profits. If you’re also looking to take profits on TSLA, do read our free “The Next NVIDIA” report. Perhaps you’ll find something to move some of those gains into.

The implications of EV tax credits and subsidies being revoked — at least according to most analysts — are going to be quite negative for Tesla. There are some people who say that Tesla will do just fine without EV credits since it’s already profitable and that it will instead wipe out Tesla’s competitors, many of whom are struggling to keep the lights on. Elon Musk himself once posted: “Take away the subsidies. It will only help Tesla.”

So, I believe this is a good reason why some hedge funds and billionaires are choosing to jump ship.

Which Billionaire Sold TSLA Stock?

Billionaire David E. Shaw — the founder and sole shareholder of D. E. Shaw & Co. — is the one who sold almost 2.7 million TSLA stock. That’s 71% of his Tesla holdings at a market value of $287.2 million. In my opinion, Shaw likely decided to play it safe by cashing out and putting it in a sector that has more growth potential.

So, where did this money go?

Nvidia (NASDAQ: NVDA). He bought almost 6 million shares of NVDA stock the same quarter he sold TSLA stock. Rosenblatt Securities recently reaffirmed a $220 price target on the stock.

It’s not too surprising since NVDA stock has by far been the best performer among the mega-caps in the past few years. However, that momentum has slowed down in the past few months. I believe David E. Shaw believes that there is a good chance that Nvidia will be able to restart its momentum in the coming months.

Should You Also Sell TSLA for NVDA?

If you are sitting on some massive gains on Tesla, it might be a good idea to take some profits right now. That said, I don’t think it is a smart idea to copy trades from a billionaire’s firm one for one. David E. Shaw does not have a crystal ball. So, I don’t think you should necessarily move those gains all into Nvidia without doing your own research.

There are many stocks on the market and you should be able to find plenty of opportunities elsewhere. But if you do want to buy NVDA instead of TSLA stock, that isn’t a bad idea by any means. Nvidia is currently changing hands at less than 47 times forward earnings. On the other hand, Tesla is trading at a nosebleed valuation of 172 times earnings. One look at their financial reports should tell you which one is the better deal. Again, this doesn’t mean that NVDA is the only thing you should move your gains into. I believe it’s also a good idea to look into some mid-cap stocks; they have been doing pretty well recently.

Is Tesla Overvalued Right Now?

I think there’s no question that TSLA stock is currently overvalued. As I said earlier, you’re paying 172 times earnings for a company which is starting to slow down. The EV industry has clearly lost its luster and analysts expect a 20.6% EPS decline for all of 2024, along with just 3% sales growth for the full year. The recovery from that isn’t expected to be all that great, either.

Yes, Tesla does not have competition in the U.S., and some would argue even in the entire West. However, it will take a very long time for the moat Tesla currently has to bear fruit. One day we will have mostly EVs on the road as governments will likely phase out fossil fuels. It isn’t going to be as fast as we thought, and it certainly doesn’t seem like things will move in this direction under the current administration.

What makes me very worried is that Tesla has already slowed down with all the tariffs and subsidies in place.

Can Robots Rescue Tesla?

Optimus robots are definitely a great concept and if they do become reality, they are going to be a massive hit. You’ll get a robot domestic servant for $30,000, and they even have a demo for that.

Sadly, I don’t think it’s that simple. Teslas were supposed to get FSD almost nine years ago. Optimus-like robots have already existed for years (look up Sophia robot), but the tech is nowhere near enough to do the things that people are hyping it up for. The AI required for such a robot to work reliably and be certified versus the advanced AI we have now simply don’t overlap.

The Verdict

I believe the next four years are going to be crucial for Tesla shareholders. In the meantime, I’d take some profits if I were sitting on some hefty gains on Tesla.