SpaceX and Tesla are two of the most compelling shorts, market vet says

The SpaceX logo is displayed at a SpaceX facility

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SpaceX stock has stumbled out of the gate since its IPO in June, but one veteran fund manager thinks there’s more trouble ahead for Elon Musk’s rocket company.

George Noble, formerly the manager of Fidelity Overseas Fund, was bearish on the stock as it headed for its IPO, and his tune hasn’t changed since the debut. Now, he’s calling for more pain for both SpaceX and Tesla on the horizon. He said each stock represents “one of the best shorts in the market.”

Following SpaceX’s historic IPO, Noble predicted that the stock price would fall by as much as 50% before the end of the year. Noble had previously raised concerns regarding Nasdaq’s decision to allow SpaceX to be fast-tracked into the Nasdaq 100, which forced passive indexes that track the index to load up on the stock.

“Grandma’s 401k now owns a $2 trillion company at roughly 90 times revenues. That’s outrageous,” Noble told Business Insider.

Noble says SpaceX and Tesla are both overvalued, but he’s also wary of the narrative around Musk’s two companies, noting that the retail trader buzz is shifting. It’s part of the reason he sees them as such compelling short bets.

Noble said that when he’s searching for short plays, he screens for stocks that have high valuations, are boosted by social media hype, and are facing a difficult macroeconomic landscape.

For this reason, Noble said he’s grown even more bearish on Tesla than he was in January, when he described it as the stock market’s biggest bubble. He said that Musk’s power over investors may be slowly fading, particularly after the company’s significant Q2 profit miss.

“The shine’s wearing off. Tesla’s unchanged for five years. Earnings are collapsing,” he said, adding that he sees the “Elon premium” that’s boosted Tesla stock as being over.

Noble added that he thinks that both Tesla and SpaceX should be trading at roughly $30 per share, implying 91% downside for Tesla and a 79% drop for SpaceX.

Samuel O’Brient is an experienced financial markets and business journalist who has written extensively on a wide range of topics involving economics, technology and public policy. At Business Insider, he covers important macro and micro economic stories, including takes from leading economists and hedge fund managers, breaking IPOs, corporate bankruptcies, meme stocks and short-selling. He also writes on other markets such as crypto, oil and real estate.He has interviewed many of the market’s most influential voices, ranging from top economists such as Mark Zandi and Richard Thaler to prominent investors including Danny Moses, Andrew Left, Anthony Scaramucci, Louis Navellier and Grant Cardone.Programs such as LiveNOW from Fox , Taking Stock and Ticker News have had Samuel on to discuss stock market and economic developments. His reporting has been cited by The New York Times DealBook, Bloomberg Radio, Forbes, Entrepreneur, Gizmodo and TheFutureParty.Samuel began at InvestorPlace, covering investing, retail trading and macro economic trends. Prior to joining Business Insider, he served as a technology markets reporter at TheStreet. He is a graduate of Sarah Lawrence College and Trinity College Dublin.Samuel’s work has appeared in publications such as TipRanks, EV and Observer. When he isn’t chasing down stories, he can often be found browsing book and record shops. To reach Samuel, email him at sobrient@insider.com or connect with him on LinkedIn. He is also on Signal as Samuel Clemens.