Billionaire venture capitalist Chamath Palihapitiya admits that he dumped his Tesla shares over the last year despite telling cult fans not to sell because he believed the stock would double or triple in value.
The founder of venture firm Social Capital, Palihapitiya has a cult following among amateur traders. He’s a big fan of SPACs — special purpose acquisition companies aka blank-check companies that go public as cash shells, with sponsors later identifying an operating business to merge with. He has also been a critic of his industry for it its lack of diversity.
Palihapitiya told CNBC in September that he had sold his Tesla position for capital to invest in other investment ideas.
Palihapitiya has been optimistic in the past about Tesla. When Tesla shares were trading at more than $800 from January to mid-February 2021, he said he was hopeful that the stock could double or triple in price. In mid-February, Tesla stock sank below $800 and stayed below $800 until October. The price has since rallied, reaching $1208 on Nov. 1.
Tesla, Inc designs, develops, manufactures, sells and leases electric vehicles, energy generation and storage systems, and offers services related to its sustainable energy products.
“I don’t have an infinite pool of capital. I don’t raise funds. I can’t go to other people. And so, when I have these ideas, the money must come from someplace, the only other solution would be for me to get totally levered up. And I’m just not comfortable with that risk. You know, I’m a meagre guy with meagre means,” Palihapitiya said.
Forbes estimates Palihapitiya’s net worth to be $1.2 billion as of Nov. 3.
Tesla has been a big stock market winner in the last 12 months, achieving one milestone after another as it entered the S&P 500 index to cap off a good year for growth stocks. The stock jumped by almost 13 percent on Oct. 25 alone after rental car company Hertz said that it ordered 100,000 Model 3 Teslas in a deal valued at about $4.2 billion.
After selling his Telsa stock, Palihapitiya said he is still optimistic about Tesla and he acknowledged that he completely underestimated how big the electric vehicle market could be.
“When you see it now, the market has flipped…Tesla will be very busy just being a best-in-class EV company,” Palihapitiya said, pointing to car manufacturers such as Ford and General Motors.
He also spoke about inflation at the Delivering Alpha conference on Sept. 29, saying he is “very concerned” about medium-term risks.
Chamath said he is focused on hypergrowth companies — those that grow more than 50 percent per year — cash-generating assets, and other assets such as Bitcoin.
He revealed that he has invested hundreds of millions into bitcoin, and said it is hard for regulators to kill crypto.
Palihapitiya is not the only Tesla booster who sold Tesla shares. ARK invest’s Cathie Wood sold more than $200 million of Tesla stock, Barrons reported in September. Unlike Palihapitiya, Tesla remains the largest holding in her ARK innovation ETF (ARKK).
“$TSLA up 30% since @CathieDWood sold $270 Million worth of @Tesla shares last month ouch!” @GregCrennan tweeted.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?