Steve Eisman's Investment Preferences and Tesla Analysis

'Big Short' investor Steve Eisman announced that he owns all the stocks in the Magnificent 7 list, which includes the best-performing stocks in the technology sector over the last decade. However, one stock in this group, Tesla, is an exception for him. Eisman likened Tesla's shareholders to a 'cult' due to their unshakeable faith in the company's long-term future.

In a recent appearance on the Lemonade Stand business podcast, Eisman stated that he owns shares of the Magnificent 7 and specified that this group consists of companies such as Nvidia Corp. (NASDAQ:NVDA), Microsoft Corp. (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms Inc. (NASDAQ:META), and Tesla Inc. (NASDAQ:TSLA).

Eisman emphasized that Tesla's earnings have declined in recent years, noting that the company's earnings peaked at $4.30 per share in 2022, but dropped to $2.04 per share by 2023. To analyze this situation, Eisman imagined himself as an analyst in a large hedge fund, stating that he found, 'Earnings will decline every year starting from 2022.'

Eisman pointed out that Tesla's value is inversely proportional to the observed revenue decline, and this situation could lead some investors to short the stock. Nevertheless, Tesla's strong fan base hinders the effectiveness of these analyses because the shareholders who believe in the company continue to maintain their conviction that the stock value will rise. Eisman said, 'A cult cannot justify a trillion-dollar valuation.'

Eisman also mentioned that some experts, like technology analyst Dan Ives, believe Tesla will succeed in the future, but even in that case, he noted it would be very difficult to convince investors. Highlighting that investors' beliefs continue despite the decline in Tesla's stock values, Eisman stated that this situation is a sign of the existence of Tesla's 'cult-like' followers.