Ray Dalio’s Bridgewater Bought Tesla in Q4 While Cutting Other ‘Magnificent 7’ Peers

The 13F filings of Bridgewater Associates, the hedge fund founded by Ray Dalio, showed that it built a new position in Tesla (NYSE: TSLA) last quarter while trimming stakes in other Magnificent 7 peers. Notably, Tesla shares rallied sharply in Q4 following the victory of Donald Trump in the US presidential elections.

While Tesla is now in a bear market after having fallen 26% from its all-time highs that it hit in mid-December, the stock is up around 30% since Trump’s election.

Dalio’s Fund Added Tesla in Q4

Bridgewater added 153,589 Tesla shares in Q4 which is valued at around $55 million. While the position is not significant given the asset base of the hedge fund, it is nonetheless noteworthy as it slashed holdings in all other Magnificent 7 constituents.

The fund slashed its holdings in Apple and Amazon by 40% and 35% respectively during Q4. Notably, Berkshire Hathaway which is led by the legendary Warren Buffett also trimmed its Apple holdings last year. However, the Oracle of Omaha seems to be done selling Apple shares and did not sell any shares in Q4 after having previously slashed them in all three-quarters prior to Q4.

Meanwhile, Bridgewater also cut its stake in Microsoft, Nvidia, Meta Platforms, and Alphabet last quarter. Tesla outperformed its Magnificent 7 peers in the final quarter of the year even as Nvidia ended up being the best performer among the lot for the second consecutive year.

Analysts Raised TSLA’s Target Price After Trump’s Election

Notably, several Wall Street analysts raised Tesla’s target price following Trump’s election expecting easier regulations around autonomous driving which by Musk’s assertion accounts for the bulk of the company’s valuations.

Tesla offers full self-driving (FSD) subscription for $8,000. Musk once said that the price for the service could rise to as high as $100,000 someday. That said, the company has had to cut the price by nearly half to boost adoption. With BYD offering assisted driving service for free, it remains to be seen whether other players also cut prices on their autonomous driving software.

Meanwhile, the name FSD is misleading as while the software is quite advanced, it is not L4 fully autonomous as the name might suggest. The nomenclature has been a point of contention with US regulators who accuse the company of deceptive marketing. Tesla is looking to offer robotaxi rides this year which would test the company’s autonomous driving capabilities.

The company unveiled its robotaxi at the “We, Robot” event in October which happens to be the first product that the Elon Musk-run company has unveiled since Q4 2019 when it unveiled the Cybertruck pickup whose deliveries began in November last year after many delays.

The Cybercab is a low two-seater and has no steering wheels or pedals. The company also revealed that it would produce a bigger vehicle named Cybervan which would have the capacity to carry up to 20 people.

Tesla’s US Sales Fell in January

Meanwhile, Musk’s association with Trump and his time commitments towards DOGE (Department of Government Efficiency) which he heads, has been making a section of the market apprehensive about the billionaire’s ability to devote adequate time at Tesla. Such concerns have been around for quite some time as apart from Tesla Musk also heads several other companies like SpaceX and Neuralink. Of late, he has added Twitter (now X) and his artificial intelligence (AI) startup xAI to the ever-growing list of companies that he owns.

The Washington Post reported that several Tesla employees believe that Musk has become “disengaged” from Tesla. Nell Minow, vice chair of ValueEdge Advisors, “He (Musk) seems to have ghosted his own company.” Minow added, “He has inflicted a massive amount of damage on the perception of that company.”

Notably, Tesla’s US sales indeed fell 16% in January as compared to December. However, it is quite usual for the company’s sales to be weak towards the beginning of the year as it pushes sales aggressively towards the year-end. On that note though, 2024 was the first time that Tesla’s deliveries fell YoY amid the slowdown in the EV market.

Stephanie Valdez Streaty, director of industry insights for Cox Automotive said, “It’s still too early to see any (Musk backlash) in the Tesla numbers.” She added, “We can’t pinpoint that polarization is causing people to buy or avoid a Tesla.”

Wedbush is Not Too Perturbed About Musk Spending Enough Time at Tesla

In their note, Wedbush analysts led by long-time Tesla bull Dan Ives said, “The worry of the Street is that Musk dedicating so much time (even more than we expected) to DOGE takes away from his time at Tesla in such a crucial moment and year for the company.”

The note added, “Musk has always been able to balance his countless initiatives better than any other CEO we have seen and the innovation and tech machine at Tesla is actually accelerating into an autonomous and robotics future despite growing skepticism around Musk’s DOGE balancing act.”

Tesla Faces a Tough Challenge in China

Meanwhile, Tesla is battling intense competition in China. Notably, there is already a fierce price war in the Chinese EV market as companies have been cutting prices and offering incentives to spur sales. The Chinese auto market is among the most competitive globally and domestic players are increasingly taking market share from foreign brands like Volkswagen and Ford.

Musk has praised Chinese EV companies several times. During Tesla’s Q4 2023 earnings call last year, he said, “Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world,” said Musk during the earnings call.

The billionaire added, “The Chinese car companies are the most competitive car companies in the world. So, I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established.”

Notably, BYD is already the world’s biggest seller of new energy vehicles (NEVs) – a category that includes both battery electric cars and hybrids.