Major Tesla investor dumps a big chunk of shares

A major shareholder in Tesla has become bearish about the company.

Scottish fund manager Baillie Gifford & Co. sold 11.1 million shares of Tesla during the first quarter, the firm disclosed in a filing Thursday. That sell off reduced the fund’s holdings by 40% since December 31. The shares sold constitute 1.2% of Telsa’s total shares outstanding.

Baillie Gifford still owns 1.7% of Tesla’s shares, and among institutional investors, still has the fifth largest stake in Tesla. But this move marks the second straight quarter in which Baillie pulled back on its Tesla holdings. The firm sold 7.4 million shares in the last three months of 2020, meaning that its has sold more than half of its stake in Tesla since the end of September.

Baillie Gifford did not respond to a request for comment about its decision to sell Tesla stocks.

The price at which the shares were sold was not disclosed, nor was the date. Tesla hit a record high close of $883 per share on January 26. Since then the company’s stock has dropped just over 25%, putting it into bear market territory. Baillie has not been alone in selling shares.

Year to date Tesla shares are down more than 7%.

But the company’s share prices were up 743% in 2020, making it by far the year’s best performing major stock. Its market value now exceeds that of the six largest automakers in the world — combined.

Tesla reported record profits in the first quarter, topping the $1 billion mark in adjusted earnings for the first time. It sold 500,000 cars last year and said it will sell more than 750,000 in 2021 while continuing to increase sales by about 50% annually in at least the next few years. The company is building two new assembly plants, one near Berlin to serve Europe and one near Austin, Texas. Both plants should be completed this year but won’t start to produce mass volumes of vehicles until next year.

Tesla is also facing increased competition from established automakers, such as Volkswagen and General Motors, which are making major pushes to increase electric car production. The shift is being driven both to meet increasingly tougher and more expensive environmental regulations and feed the growing demand for electric vehicles from car buyers. These competitive offerings have started to eat into demand for Tesla vehicles.