Billionaire Investor Cuts Tesla Stake, Doubles Down on Alibaba Stock

TLDR

• Billionaire Philippe Laffont sold 15% of Coatue Management’s Tesla stake in Q3 2025, reducing holdings by 307,780 shares
• Laffont increased Alibaba position by 130%, purchasing 1,128,826 shares during the same quarter
• Tesla’s pre-tax income relies heavily on non-core sources, with 40% coming from regulatory credits and interest income in Q3
• Alibaba’s cloud revenue grew 26% year-over-year to $4.66 billion, with AI-related products showing triple-digit growth for eight straight quarters
• Alibaba trades at 16 times forward earnings, lower than comparable AI stocks, despite strong cloud and AI growth

Philippe Laffont, the billionaire managing $41 billion at Coatue Management, made major portfolio changes in the third quarter of 2025. The moves came to light through Form 13F filings submitted to the Securities and Exchange Commission on November 14.

Laffont reduced his fund’s Tesla position by 307,780 shares, representing a 15% decrease in the stake. This continues a selling trend that started in early 2023 when Coatue held approximately 4.85 million Tesla shares. Since March 2023, Laffont has sold more than 3.12 million shares of the electric vehicle maker, a 64% reduction in the position.

Tesla, Inc., TSLA

The selling comes despite Tesla shares rising nearly tenfold since Laffont first bought them in early 2020. The stock has also doubled since Coatue’s holdings peaked in the first quarter of 2023.

Tesla delivered approximately 1.8 million electric vehicles in both 2023 and 2024. However, the company has cut prices more than six times over the past two and a half years. CEO Elon Musk stated during the 2023 annual meeting that EV pricing depends on consumer demand.

Tesla’s Income Sources Raise Questions

Tesla’s third quarter financial results showed 40% of pre-tax income came from automotive regulatory credits and net interest income. These revenue streams are considered unsustainable by market analysts. In some previous quarters, these two categories accounted for more than 50% of the company’s pre-tax income.

The company’s vehicle margins have decreased due to the price cuts. Market watchers view this as evidence of increasing competitive pressure in the electric vehicle market.

Musk’s unfulfilled promises also remain a concern for investors. The CEO has claimed Level 5 full self-driving capability was “one year away” for the past 11 years. He also predicted one million robotaxis would be on American roads by 2020, a target that was never met.

Laffont Increases Alibaba Holdings

While selling Tesla, Laffont purchased 1,128,826 shares of Alibaba Group during the same quarter. This purchase increased Coatue’s Alibaba position by 130% compared to mid-2025 holdings.

Alibaba Group Holding Limited, BABA

Alibaba dominates China’s e-commerce market through its Taobao and Tmall platforms. According to the International Trade Administration, these platforms control 44% of China’s online retail sales. This is 20 percentage points ahead of the next competitor, JD.com.

The company’s Cloud Intelligence Group generated $4.66 billion in revenue during the June-ended quarter, up 26% year-over-year. Alibaba reported AI-related product revenue maintained triple-digit year-over-year growth for the eighth consecutive quarter.

Cloud and AI Drive Growth

Alibaba Cloud is incorporating generative AI and large language model solutions into its service offerings. These additions help subscribers enhance their business operations while boosting Alibaba’s growth rate and operating cash flow.

China’s e-commerce market continues to expand at a faster pace than the United States market. This growth is driven by the country’s growing middle class.

Alibaba stock trades at approximately 16 times forward-year earnings. This valuation is lower than AI-focused stocks in the Magnificent Seven group, which includes Tesla. The pricing also does not account for Alibaba’s large net cash position.

Alibaba is scheduled to report second quarter fiscal year 2026 earnings on November 25, 2025. Wall Street analysts expect earnings of $0.85 per share on revenue of $34.29 billion, representing a year-over-year revenue increase of over 4%.

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