Steve Eisman's Investment Preferences and Tesla Analysis

'Big Short' investor Steve Eisman announced that he owns shares in all the stocks on the Magnificent 7 list, which includes some of the best-performing stocks in the technology world over the past decade. However, one stock from this group, Tesla, is an exception for him. Eisman compared Tesla's shareholders to a 'cult' due to their unwavering belief in the company's long-term future.

Eisman recently stated on the Lemonade Stand business podcast that he holds shares in the Magnificent 7 member stocks, which consist 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 revenue has decreased in recent years, stating that the company's earnings peaked at $4.30/ share in 2022, while this figure has dropped to $2.04/ share as of 2023. To analyze this situation, Eisman imagined himself as an analyst at a large hedge fund, noting that he concluded, 'Earnings will decline every year starting from 2022.'

Eisman pointed out that Tesla's value is inversely related to the observable decline in revenue and that this situation may lead some investors to short the stock. Nevertheless, the presence of a strong fan base for Tesla hinders the effectiveness of these analyses; because shareholders who believe in them maintain their faith that the stock value will rise. Eisman stated, 'A cult cannot justify a trillion-dollar valuation.'

Eisman also mentioned that some experts, like technology analyst Dan Ives, believe Tesla will be successful in its future, but even in this case, he noted that persuading investors is quite difficult. Eisman stressed that despite the decline in Tesla's stock values, investors' beliefs continue, and this situation is a sign of the existence of Tesla's 'cult'-like followers.