Tesla is witnessing the exit of some institutional investors who believe that the era of crazy growth for this electric vehicle manufacturer has become a thing of the past.

In the past five years, Tesla's stock price has risen nearly 14 times. This makes investors accustomed to holding Tesla stocks in adversity, accepting that their valuations are more similar to technology companies rather than car manufacturers.

However, now even some of Tesla's most loyal followers are beginning to doubt whether the company can achieve the same level of expansion in the future. According to Morningstar's data, out of the 18 mutual funds that have held Tesla stocks since 2019, 10 have reduced their holdings in the first quarter, with 4 having reduced their holdings by 15% or more.

Tesla's stock price has fallen nearly 30% so far this year, more than 50% below its peak in 2021. With Tesla CEO Elon Musk struggling to cope with fierce competition and declining sales, the company's market value has evaporated by approximately $600 billion. Meanwhile, Tesla's performance in the first quarter did not meet analyst expectations.

According to reports, Gabelli Fund sold all 65,900 Tesla shares it acquired in early 2022 in the first quarter, while long-term investor Ross Gerber (founder of Gerber Kawasaki Wealth&Investment Management) also continued to sell Tesla this year.

Gerber criticized Tesla's public relations department for funding shortages and believed that Musk had been distracted by political and cultural issues. He said, "In the past year and a half, Elon's pursuit has surpassed Tesla and its shareholders' interests based on his perspective on the world." Gerber believes that as long as Musk continues to lead Tesla, the company's stock price should be around $100, about 40% lower than current levels.

However, Wall Street is mostly optimistic about Tesla's stock. According to LSEG, currently 19 analysts have rated Tesla as a buy or strong buy, an increase from 17 in February. In addition, the average target price of 49 analysts tracked by LSEG is Tesla's $178.95.

Tesla's current market value exceeds $560 billion, making it the world's largest car manufacturer by market value. By contrast, Toyota, the world's best-selling automaker, has a market value of $333.7 billion.

Tesla's forward price to earnings ratio (P/E) is as high as 64 times, even surpassing some high-tech companies. For example, AI chip giants Nvidia and Supermicro have forward P/E ratios of 37.8 times and 23.2 times, respectively. The valuations of other car manufacturers are much more conservative, with forward P/E ratios of 4.7 times, 6.4 times, and 10.1 times for General Motors, Ford, and Toyota, respectively.

Investors who are optimistic about Tesla have put forward a long list of reasons to justify its valuation, including the company's technology and its fanatical fan base. The recent optimistic news is that Tesla is about to launch Fully Autonomous Driving (FSD) in China.

Cathie Wood, invested by ARK, is one of Tesla's supporters. Her ARK Innovation Fund has been holding Tesla stocks since 2014 and increased its holdings by 10% in the first quarter.

Wood estimated in April 2022 that Tesla's stock price would reach $2,000 by 2027, even in a bear market scenario, reaching $1,400, mainly due to the expected launch of Tesla's automated taxi business. Wood has maintained this price target and purchased approximately $100 million in Tesla stock in April 2024, stating that it is not the time to leave.

It is worth noting that Tesla remains the largest holding of ARK Innovation Fund, accounting for nearly 12%. However, the fund has fallen by nearly 18% so far this year, compared to a more than 10% increase in the S&P 500 index during the same period.