Billionaire fund manager dumps Tesla in favor of other tech stock

As Tesla  (TSLA)  prepares for a historic event, both investors and consumers are watching the stock closely.

The electric vehicle (EV) producer is gearing up to roll out its new robotaxi fleet, marking its foray into the world of autonomous driving. Although these cars will have a teleoperator on standby, they are still expected to operate without a physical driver present.

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Despite some volatility earlier this month, TSLA stock has garnered noticeable momentum and continues to perform extremely well, with gains of almost 25% for May. However, during the first quarter of the year, institutional sentiment toward Tesla and Musk started to decline, as multiple hedge funds started trimming their Tesla positions over the past few months.

One prominent hedge fund manager took it a step further, as his fund offloaded its entire TSLA stock holdings during Q1.

Wall Street sentiment toward Tesla remains questionable

As Tesla stock trended downward over the first quarter of 2025, some experts raised questions about its growth prospects. The company’s Q1 earnings report made it clear that Musk’s polarizing actions had negatively impacted Tesla’s brand, compromising EV sales on a global scale.

Related: Billionaire fund manager unloads over $100 million of Tesla stock

While some investors opted to lower their exposure to Tesla, one billionaire exited his fund’s entire position. The 13F filings of Daniel Loeb, founder of value-oriented hedge fund Third Point, indicate that he sold roughly 500,000 shares of Tesla stock during Q1 2025, which he only acquired in the final months of 2024.

This decision stands out —
it is somewhat out of character for a fund manager like Loeb, since the average hold time for a stock in Third Point’s portfolio is just over a year. The short timeline between the fund taking the position in Tesla and cashing out indicates that it lost confidence in the company in a relatively short time period.

Some experts have recently raised concerns about Tesla’s high valuation and share prices as the stock has soared recently. Venture capitalist Bradley Tusk recently addressed this, noting that Musk’s mentality may be putting the company’s growth prospects at risk.

“Let’s be honest about Tesla — it is a company that is massively overvalued solely based on the pixie dust of the notion of Elon Musk’s kind of magic abilities and retail investors believing in that,” he stated. “What he can’t have is the cake of way artificially high valuations for Tesla and then eating it too — meaning doing everything but Tesla.”

Loeb isn’t the only hedge fund manager who sold a significant amount of TSLA stock in Q1. Filings reveal that billionaire investor Philippe Laffont’s Coatue Management sold 600,000 shares, though it still holds 1.6 million.

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Even as the highly-publicized robotaxi launch approaches, Wall Street sentiment toward Tesla remains mixed. Data shows that out of 37 analysts, only 16 maintain buy ratings, while 10 rate it as a hold and 11 call it a sell, earning it an overall Hold consensus.

Loeb sold two Magnificent 7 stocks but doubled down on another

Tesla isn’t the only prominent tech stock in which Third Point offloaded its entire stake during Q1. The hedge fund also closed out its position in Meta Platforms  (META) , another company that struggled in the year’s first quarter but has since started rising again.

Related: Tesla faces big threat from rivals in key market

That said, Loeb’s firm added 1.45 million shares of Nvidia,  (NVDA)  another member of the Magnificent 7, a group of high-growth tech stocks responsible for most of the sector’s growth. The artificial intelligence (AI) leader is up almost 19% for the year and despite constant volatility, Third Point clearly believes it has even more room to run.

Nvidia remains one of Wall Street’s favorite stocks, with 32 analysts currently maintaining buy ratings, earning it a Strong Buy consensus.

“The firm ended that quarter with a cash position of $43.21 billion, inventories of $13.38 billion and long-term debt of $8.463 billion,” notes Wall Street veteran Stephen Guilfoyle. “Nvidia had no shorter-term debt on the books. The firm’s current and quick ratios stood at 4.44 and 3.67, respectively, which is simply outstanding.”

Both Nvidia and Tesla are currently in focus right now as the former prepares to report earnings. But while the AI leader can likely bounce back from a disappointing quarter, Tesla’s future appears more questionable, particularly as Musk has described himself as “paranoid” about the robotaxi launch. 

Related: Veteran fund manager unveils eye-popping S&P 500 forecast

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