Big up’s to Chris Harvey, head of equity strategy at Wells Fargo [$WFC] who hopped on CNBC to chat about how Tesla’s [$TSLA] recent ticket to the big leagues in the S&P 500 is akin to the dawn of the dot-com bubble. Specifically, Harvey, in underscoring Wells Fargo’s top 10 prognoses for 2021, drew a parallel between Mr. Musk’s electric-car company and AOL, a treasure of the Internet hysteria decades ago.
“AOL, similar to Tesla, had a game changing technology, incredible performance… it goes into the index late in the year in December after an amazing run,” Harvey said. “But it was a seminal event.”
Shortly after its unwavering rally in the late 90s, AOL, like many martyrs of the dot-com bubble, failed to keep up with the times, which is a risk that Tesla, up almost 700% this year, also faces in 2021. “After ’99, many tech and growth companies lost 50% to 100% [of value],” Harvey said. “We’re thinking in 2020, everything happens much faster. So, if it took 12 months for the end to begin, now it’s going to take six months.” Uh Oh, Tesla Bears are Starting to Cover Short Positions
For Harvey, better places for investors to look include cyclical, “COVID-beta” names. “Old economy, not new economy,” he predicted. Tesla shares were drifting lower ahead of Monday’s opening bell, while futures on the Dow Jones, Nasdaq Composite, and S&P 500 were all green to start the week.