Patrick Armstrong, managing partner at Plurimi Investment Managers, told CNBC Monday that, “Tesla is obviously leading the charge with electronic, electric cars. Rightly so, that’s where the industry is going.”
But Armstrong’s notes pointed out that while Tesla sold 47,000 electric cars through to June, BMW’s sales of plug in cars were 50,000 through to July. “BMW is not getting credit,” Armstrong said.
In addition, Tesla remains loss making despite a surge in second-quarter revenues, while BMW saw net profit rise 14 percent in the same time period. Armstrong said that Tesla’s negative earnings were “hard to justify.”
Adding to his rationale, Armstrong questioned whether Tesla would become “the Apple of electric cars,” arguing that the Elon Musk-led company “isn’t going to end up with a monopoly position, governments aren’t going to allow that.”
“Tesla great for consumers because cars are priced in a non-profitable way, but that is not great for shareholders as it won’t crowd out competition in this industry,” unlike Amazon’s trajectory in the retail space, he added in his note.
Short interest swirling around Tesla’s stock has caught CEO Musk’s attention previously. In June this year, he posted a series of tweets addressing the issue.
Tesla is expected to unveil a new electric truck offering in late October.
BMW, meanwhile, is aiming to mass produce electric cars by 2020, with 12 different models by 2025.
Armstrong was also downbeat on another major disruptor stock, this time in the entertainment industry. He was short on Netflix, but long on Disney, arguing that the latter company is set for a bumper 2019 with releases in major franchises such as Frozen, Indiana Jones and Star Wars.
Disclaimer: Plurimi Investment Managers holds short positions in Tesla and Netflix and long positions in BMW and Disney.