“Bond King” Bill Gross says Tesla is the new meme stock with “weakening fundamentals.”

Elon Musk has long enjoyed a loyal group of Tesla shareholders who have helped propel the company to star status on the stock market over the past five years. However, according to Bill Gross, also known as the “Bond King,” this group of supporters is now nothing more than meme stock traders: retail investors who followed the example of RoaringKitty and pushed GameStop shares to incredible highs. Comparing the electric vehicle manufacturer Tesla — one of the “Magnificent Seven” that has significantly disrupted the automotive industry in recent years — to viral stocks like GameStop, Blackberry, and AMC Theaters signals a broader trend in market behavior, according to Gross. The billionaire bond fund manager, who founded investment firm PIMCO in the 1970s, used Musk’s social media platform X to share his thoughts on Tuesday.

“Tesla is behaving like a meme stock — weakening fundamentals, sharp price increases,” he wrote. “But it seems there’s a new meme stock every two days now. Most are ‘pump and dump’ schemes. And the old favorite GME.” Tesla did not immediately respond to requests for comment.

Led by Musk, the electric vehicle giant faces some tough challenges, chiefly maintaining its competitiveness as cheaper, attractive alternatives flood the market and securing necessary parts to sustain production at scale. Earlier this month, Tesla’s Austin-based operations exceeded analysts’ expectations, announcing deliveries for Q2 of around 444,000 vehicles. This represented a 5% decline from last year but surpassed expectations. Tesla shares rose during the week following the earnings announcement, climbing approximately 14% at the time of this writing. However, despite the Q2 relief, Musk and his team will still be watching Chinese automaker BYD over their shoulders. In early July, the Shenzhen-based manufacturer reported a 21% increase in electric vehicle sales, amounting to 426,039 vehicles sold between April and June according to Reuters calculations.

The Chinese manufacturer is increasingly making its mark in Western markets and unlike Tesla, isn’t afraid of a little publicity. Take for instance its sponsorship of this summer’s Euro football tournament, raising brand awareness and offering a cheaper entry point than its American competitor. Tesla has started to slip from its peak in recent years. Even record sales in 2023 weren’t enough to beat Warren Buffett-backed BYD and claim the top spot for vehicle sales by year-end. In Q4, Tesla reported delivering 484,507 vehicles to customers worldwide between October and December, selling nearly 1.81 million vehicles in 2023 with a significant 38% increase. On the other hand, BYD clinched the title of the world’s largest electric vehicle manufacturer this quarter, announcing it ended the fourth quarter with record 526,400 electric vehicles sold, delivering 1.59 million fully electric vehicles in 2023, up 73% from the previous year.

Moreover, Tesla’s once seemingly unassailable market position has diminished in recent years, according to automotive research specialists Kelley Blue Book (KBB). KBB reported earlier this year that in Q3 2023, Tesla’s market share fell below 50% for the first time, a drop from 75% in 2022 and 62.4% at the start of 2023. Tesla and AI Another issue facing Tesla is securing enough chips to power its technologies — and it’s not alone. However, one factor others don’t have to contend with is redirecting chips originally intended for one company to another. Last month, Musk, the world’s richest person with a net worth of $274 billion according to the Bloomberg Billionaires Index, acknowledged redirecting AI chips from Nvidia, originally slated for Tesla, to his new startup xAI and social media company X. “Tesla had nowhere to send Nvidia chips to integrate, so they were just going to sit in storage,” he posted. However, the fact that Musk has such vast resources may be a factor attracting some Tesla shareholders who approved his record pay package.

After all, he told analysts to stop viewing Tesla as an automotive company and instead evaluate it as a robotics or artificial intelligence enterprise. While analysts remain skeptical — criticizing the company for overpromising and underdelivering, with some speculating Tesla should be removed from the “Magnificent Seven” list, the fact remains that the Model X manufacturer is still embroiled in a contested race to become the world’s largest electric vehicle producer. As its stock price has surged a staggering 1,511% over the past five years, the question remains whether Tesla possesses what it takes not to be compared to meme stocks.