Is Tesla (TSLA) Still a Smart Long-Term Buy?

Worm Capital, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. During the first quarter of this year, the fund outperformed its benchmark, the S&P 500 TR by 25.64 percentage points but its year-to-date return is still down by -18.12%, compared to the -4.59% return of its benchmark over the same period. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Worm Capital mentioned Tesla, Inc. (NASDAQ:TSLA) and explained its insights for the company. Founded in 2003, Tesla, Inc. (NASDAQ:TSLA)  is an Austin Texas-based automotive electric vehicle and clean energy company with a $1.0 trillion market capitalization. Tesla, Inc. (NASDAQ:TSLA)  delivered a -6.79% return since the beginning of the year, while its 12-month returns are up by 33.32%. The stock closed at $985.00 per share on April 15, 2022.

Here is what Worm Capital has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:

“Over the last several months, we have become increasingly bullish on Tesla, our largest holding. As an expression of our increased confidence, through Q1 we increased our Tesla position. At a high level, we believe Tesla is on a path to dominate the S&P 500. Much like Amazon emerged from the Nasdaq Bubble and the Financial Crisis, we think Tesla has at least another 10 years of growth ahead, and it is just now hitting its inflection point of accelerated, rapid growth.

At the same time, consensus estimates of Tesla’s growth are, in our view, extremely low. This dynamic, in our opinion, will likely result in consistent upwards revisions to expectations, creating one of the more dramatic arbitrage investment opportunities we have ever come across. From a data, scale, and advanced manufacturing perspective, the company is entering escape velocity. To be clear, Tesla’s stock price and market value is no longer a reflection of anticipated success. It reflects its current success and proven ability to generate substantial earnings and record-setting cash-flows at scale. In sum: It’s early days. We’ll soon be publishing a comprehensive research report on Tesla. Stay tuned.”

Our calculations show that Tesla, Inc. (NASDAQ:TSLA) ranks 26th on our list of the 30 Most Popular Stocks Among Hedge Funds. Tesla, Inc. (NASDAQ:TSLA) was in 91 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 60 funds in the previous quarter. Tesla, Inc. (NASDAQ:TSLA) delivered a -4.51% return in the past 3 months.

In March 2022, we published an article that includes Tesla, Inc. (NASDAQ:TSLA) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.