Managing Partner, The Future Fund LLC, SEC registered investment adviser. CEO/CIO/PM. linkedin.com/in/garydblack. Disclosure: bit.ly/3fQ8ojd
Chicago, IL
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Some basic lessons for new investors to live by:
1/ Ignore the crowd. You make money by going against the consensus.
2/ Always pick stocks where you feel you have a research edge.
3/ You rarely go wrong investing in the company with the best product.
4/ Don’t listen to management. They are paid to be bullish.
5/ Study competitors, suppliers, and customer behavior. Be a product junkie.
6/ Have in your mind what you think a stock is worth, which is different from price.
7/ Be able to articulate in one sentence why you own a stock.
8/ Develop specific downside scenarios that would cause you to sell the stock.
9/ The highest quality of growth is unit growth, then pricing, then margin expansion, then cash reinvestment.
10/ Be wary of companies that grow by buying other companies.
11/ Sell discipline is selling a stock once it exceeds your price target, or if your investment thesis changes.
12/ Short stocks that have bad businesses, and not because they trade at high P/Es.
13/ Two big value creators are brand extension and TAM expansion stories.
14/ High P/Es are a function of high future growth rates, and not the industry.
15/ When investing in growth stocks always look for a controversy (“fight”).
16/ Buy stocks that can leverage key secular megatrends, and avoid those that will be hurt by them.
17/ Always consider cannibalization of existing products when sizing up new product opportunities.
18/ Be wary of “hockey stick” sales forecasts absent new products or expansion to new distribution channels.
19/ Stock buybacks are accretive if the E/P ratio exceeds the after tax cost of debt or return on cash.
20/ Price cuts rarely add value since they often create a race to the bottom.
21/ Stocks are cheap if price is less than the present value of future cash flows. A high P/E does not make a stock expensive.
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Yeah, I voted for Trump but I never thought he’d be so foolish to actually move forward with 25% tariffs given the well-documented history of how the Smoot-Hawley Tariff Act of 1930 triggered the onset of the Great Depression as global trade flows dried up.
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Most informative chart in the 1Q earnings deck: The day after the 2022 Super Bowl, $TSLA orders surged, which validates our long held view that competitors’ advertising their new EVs helps TSLA as EV market leader the most. @elonmusk @MartinViecha
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Apparently, 49% of President Biden’s 22M $twtr followers are fake. @elonmusk tweaktown.com/news/86256/twi…
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My 2 cents: The market voted today that the $TSLA brand has been negatively impacted by the Twitter drama. Where before EV buyers were proud to drive their Teslas to their friends or show off Teslas in their driveways, now the Twitter controversy is hurting Tesla’s brand equity.
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Probably the 4 most important charts from a fundamental standpoint that show $TSLA can grow volumes at 50%+ for the foreseeable future. @MartinViecha @elonmusk
Source: EV-volumes.com
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The $TWTR board’s interests aren’t waligned with TWTR shareholders. The board serves to represent shareholders. If they refuse to act in the best interest of SHs, they should be removed and replaced by new board members who understand their fiduciary obligations.
Elon Musk is in for a bad time.
I’m not sure he’s prepared to take on a couple PhDs, a few MBAs, and a Baroness who use Twitter once a year (to reset their passwords) and collectively own 77 shares of the company.
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Merry Christmas to the entire $TSLA Twitter community! Thank you for all of your support in 2021. See you all next week.
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What Putin didn’t count on:
- Europeans united in banning Russia from SWIFT
- Russian flights banned from Europe airspace
- Russians emptying ATMs and protesting in streets
- Russian tanks running out of gas & supplies
- Kyiv and Kharkiv haven’t fallen
- Zelensky still in charge
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I’ve rarely seen a company founder rip his own hand-selected board as being dysfunctional. Speaks volumes about $twtr board. Good for @jack.
nypost.com/2022/04/18/jack-d…
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Elon - you can’t compare a very short duration bank account with long duration $TSLA stock. The proper compare is the 10yrTY, which has dropped from 3.92% to 3.65% today. Since you closed on TWTR, TSLA -38% vs NDX -1%. If it was all int rates, NDX would be down a similar amount.
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No. Being the principal owner of Twitter and running Twitter as CEO are entirely different matters. If he gives up running TWTR, Elon can focus on $TSLA, and there is far less chance of permanent brand risk at TSLA.
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Let’s be honest: Most WS analysts are used to being spoon-fed. And most CEOs hate providing guidance. They do it because their competitors do it. $TSLA not providing guidance just means WS has to do its own research, which is how it should be anyway.
@elonmusk is wired differently than most CEOs. TSLA’s mission is to accelerate the world’s transition to sustainable energy. Providing WS guidance doesn’t further that mission in any way. TSLA’s 4Q results were actually better than WS expected stripping out accounting adjustments and non-cash tax rate changes going forward. Gross margins ex-reg credits grew QoQ to 17.2% as auto COGS per unit fell -8.5% YoY, supporting the thesis that auto gross margins bottomed in 3Q at 16.3%.
Last night, $TSLA declined to cut US prices on a Thursday, which is when 90% of TSLA price changes occur. Recall Elon’s comment on the earnings call that “If interest rates come down quickly, I think margins will be good.” As one of my clients @drjeffyu suggested yesterday It may also mean that going forward Elon is willing to sacrifice short term volume growth for profitability. As TSLA learned in 2023, cutting price doesn’t necessarily lead to more volume.
What we saw Wed night was Elon saying GFY to Wall Street. With the former CFO gone, Elon likely said let’s stop this silly custom of providing annual volume guidance to WS at the beginning of the year, which we are then beholden to the rest of the year. I’m actually good with that. As an analyst my job is to figure out the intersection of volume and price and forecast the stock price accordingly. It’s not written down anywhere that CEOs have to guide anything about the coming year. TSLA investors had a fit yesterday because they are used to be being spoon-fed the company’s outlook and now they have to do their own research. We all need to grow up. @elonmusk @MartinViecha
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@elonmusk has single-handedly transformed the auto industry to go electric. He has pushed $TSLA into all market segments (Cybertruck, Semi, and M-$30K on deck). FSD is transforming self-driving. He attracts the best talent. We need Elon as $TSLA CEO to take us to $3T valuation.
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Outstanding!
BREAKING: Tesla shareholders have officially re-approved Elon Musk's 2018 compensation package, and approved Tesla's reincorporation to Texas, according to @elonmusk.
Let's goooooo!!!
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When Cybertruck comes out in a few weeks, it will be the biggest people magnet vehicle we’ve ever seen. Wherever Cybertruck goes, people will surround it, take selfies of themselves on it, next to it, and attached to it, and post them on social media for all the world to see. If you can’t see that Cybertruck will spark a huge halo effect of interest in the entire $TSLA franchise unlike any vehicle we’ve seen in years, you’re not thinking clearly. @MartinViecha @elonmusk
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A new era is starting. $tsla
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Doesn’t it feel better when $TSLA fights back? A little PR goes a long way.
Reuters published an article that leads with a wildly misleading headline and is riddled with incomplete and demonstrably incorrect information.
This latest piece vaguely and nonsensically suggests there are thousands upon thousands of disgruntled Tesla customers. It’s nonsensical because it’s nonfactual—the reality is Tesla’s customer retention is among the best and highest in the industry.
Misleading headline:
“Tesla blamed drivers for failures of parts it long knew were defective.”
Reality (buried in the article):
Tesla paid for most of the 120,000 vehicle repairs under warranty.
Manufactured story:
The customer photo represents not a failed component, but instead a post crash component that was damaged in the course of reducing the adverse effects of a collision. The customer was informed that Tesla was able to review the telemetry and understood there was a crash that resulted in this repair not being covered by warranty.
Most, if not all, manufacturer warranties exclude damages caused by a crash because that is the point of insurance coverage.
Helpful context:
Tesla has the most advanced vehicle telemetry system that can identify emerging issues, determine scope, and allow for faster vehicle and service improvements than has ever been seen in the auto industry. We take action as soon as we see a problem, something that should be celebrated as best-in-class, and is often cited by our regulators as a major safety advantage.
False accusation:
The author has conflated a noise-related (non-safety) issue with a range of unrelated and disconnected service actions. Contrary to the article’s statements based on erroneous data, Tesla is truthful and transparent with our safety regulators around the globe and any insinuation otherwise is plain wrong.
Tesla Service Principles:
a.
Our service technicians and advisors diagnose, maintain and fix our customers’ cars efficiently and are not incentivized to profit off customers’ repair needs.
b.
Tesla provides our service employees with excellent compensation and benefits packages. They don’t work off of commission like at other dealers who are incentivized to upsell or overcharge their customers.
c.
The best service is no service. When service must be done, we fix 90%+ problems without even needing the customer present – either through over-the-air updates or with mobile service at a customer’s house or workplace.
To see Tesla’s approach in action, one can refer to this maintenance study from earlier this year, “Tesla was named the cheapest luxury car brand to maintain..” → autos.yahoo.com/tesla-named-…
This cherry-picking approach to journalism results in missing the truth, which is a pattern in many of the negative articles about Tesla.
Using one customer’s one-sided version of events as the universal experience of all customers paints a false and misleading picture of Tesla. In reality, for every upset customer, there are hundreds more who are thrilled with their Tesla and eager to repeat their business. The numbers don’t lie in terms of repeat sales and customer satisfaction.
We strive to make every customer a lifelong member of the Tesla family.
While others may have their own agendas, our principles have been the same since the beginning: to make the safest cars in the world, which are easiest to maintain, while accelerating the world’s transition to sustainable energy.
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Thank you for putting this to a vote @elonmusk.
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An open letter to Tesla’s Board of Directors - see attached.
With $TSLA selling at its lowest forward P/E (37x on WS 2023 EPS) since Covid, with $18.9B in cash and no debt and an investment grade rating, now seems an ideal time for Tesla’s BOD to consider a $10B+ share buyback.
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$MSTR ‘s stock price makes no sense to me. MicroStrategy owned 331,200 bitcoins at last count, worth $31.2 billion at #BTC =$100K, and has about $4.2 billion of net debt, which equates to $27B equity value. By comparison, MSTR’s stock market value is $106 billion using the company's most recent share count. The software business isn’t worth much. I estimate $MSTR shares should be worth about $105/share, or about 75% lower than where they are trading this morning. Unless MSTR’s bitcoins are worth 4x what everyone else’s bitcoins are worth.
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Just after midnight, President Trump said he would buy a new Tesla this morning to show his support for Elon Musk. Trump’s endorsement could get millions of Republican supporters proud of Elon’s work on DOGE to follow Trump’s lead.
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$TSLA Cybertruck in Chicago store on Rush Street. Arrived this morning. Nothing else compares. This can provide massive halo effect to $TSLA sales in 2024. @MartinViecha @elonmusk
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$TSLA halo effect.
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So much good news for $TSLA stock this week:
- China Jan sales stronger than expected ($66K +18% vs Dec; NEV industry -45%)
- All Model Y trims now eligible for $7,500 EV credit; TSLA likely to adjust M-Y prices higher
- @elonmusk found not liable in SFO “funding secured” trial
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$TSLA has to file a protest with the IRS for the inconsistencies in IRA EV cap - M-Y 5-seat and 7-seat are same size truck. Other 5-seat SUVs of similar or smaller size (VW ID.4 AWD Pro) have $80K cap. @MartinViecha
- Model Y 185L x 75.5W x 64H
- ID.4 AWD Pro 181L x 73W x 65H
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I asked my $TSLA contacts in Chicago about Cybertruck pricing. No one is saying a word until after the 11/30 delivery event. I agree with @wholemars that @elonmusk wouldn’t create a huge Cybertruck delivery event in Austin only to disappoint the crowd on price. Affordability is important.
With that in mind, I predict CT base prices as follows:
- Single Motor $49,990
- Dual Motor $59,990
- Tri Motor $79,990
Only the dual and tri-motor versions will be available initially. All trims will qualify for the $7,500 EV credit that goes off-invoice starting 1/1.
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I like the use of this authorized and verified Tesla Twitter account to fight FUD. @elonmusk @MartinViecha $tsla
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The three big takeaways from today’s $TSLA Annual Mtg and live interview between @elonmusk and CNBC’s David Faber:
1/ @elonmusk committed to try advertising, which is hugely bullish since TSLA will add a second variable beside affordability to accelerate EV adoption. We’ve long held the biggest $TSLA value driver is to educate the 90% of Americans who don’t currently drive EVs why an EV. Elon appears to have realized EV adoption is not just about affordability. We were stuck by how loud the applause was today when Elon said “we’ll try advertising and see how it goes.”
2/ Elon said “it ain’t so,” squashing rumors that he might leave as TSLA CEO. This too is hugely positive since it’s the primary reason $TSLA has been weak the past few days. No disrespect to Zach but he’s not Elon.
3/ There are not one but two new $25K next gen vehicles being developed with a combined incremental demand of 5M units - our guess a hatchback (like Corolla) and baby CUV (RAV4) that should strike fear in competitors’ hearts.
For those that refused to believe Elon would ever spend money to advertise - the tide will now turn as new Twitter CEO @lindayacc shows Elon how important advertising can be. Elon himself acknowledged the irony that we’ve flagged repeatedly: Twitter’s business is selling advertising but $TSLA itself has never advertised. That is all about to change. Amen.
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I test drove a $TSLA Model S Plaid today. 0-100 in just over 4 seconds. I’ve owned 1/2 dozen Porsche Turbos and I’ve never felt anything like it. Like a rocket ship. CyTruck quad motor will likely have the same 1000+ HP. Should be called Cybertruck Plaid. Can’t wait to get mine.
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If analysts actually run the $TSLA volume/pricing/margin math, they’ll see these price cuts don’t materially impact TSLA’s valuation.
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In a word, $TSLA 4Q delivs of 308.6K are insane. With the Street at 266K, a +16% volume beat will cause analysts to leapfrog each other to boost 4Q EPS ests from $1.97 to >$2.40, 2022 delivs ests to increase from current 1.3M to 1.5M and 2022 EPS from $8.70 to >$10 (my est $12).
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$TSLA is our largest position. I have a 6-12 mo PT of $550, which is higher than any WS analyst. When I try to explain why TSLA is down (China sales, TWTR overhang) S/T traders come out and attack me for spreading FUD. I own TSLA for the long term. Markets aren’t always rational.
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My read on Zach’s resignation: $TSLA has made him very wealthy and Zach likely told Elon it was time for him to move on and suggested he leave at year-end. Elon likely asked him to reconsider, Zach reconsidered and told him he still wanted to leave, Elon took it badly and said let’s make it effective immediately. I don’t see this as Zach disagreeing with Elon’s vision, product or pricing strategy which have all been well telegraphed. @elonmusk @MartinViecha
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$TSLA not on the Time 100 most influential company list, but $F and $RIVN are? Very sus. time.com/collection/time100-…
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Cry more $TSLAQ. Wait til Cybertruck delivs start.
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Under new proposed Treasury guidelines announced today, all $TSLA M-Ys will qualify for the $7,500 IRA EV credit, not just the 7-seat trims.
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At $178, $TSLA now trading at the lowest 1yr forward P/E (42x) since at least 2019. A $10B buyback would be hugely accretive here and change the awful sentiment since the $TWTR deal. @MartinViecha @elonmusk
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If Elon stops talking about autonomy until it works near flawlessly and focuses on his amazing existing businesses - EVs where TSLA dominates everyone (what competition?) and Energy where profits just tripled and gross margins are now higher than on EVs - $TSLA stock would be higher. Imagine if Tim Cook said $AAPL is going to cut price on iPhones and make it up on cloud storage and Apple Music and other services - that would never happen. TSLA fundamentals are outstanding but that fact gets lost in all the noise. @MartinViecha
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All these nervous $TSLA bulls running around warning that shareholders may not approve Elon’s 2028 comp plan, which could cause Elon to leave the company. This is insane fear-mongering at its worst. IMHO TSLA SHs will overwhelmingly approve Elon’s comp plan in 2024, just as 73% approved it in 2018 before the 8x TSLA value creation of 2018-2024 vs 1.6x for NDX. Just pay the man what is due him.
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1/ Please hire a marketing-driven CEO who complements your engineering and tech skills to send a message to advertisers that you value them.
2/ Stop the noise. Higher engagement is worthless if your advertisers leave due to the noise. You shouldn’t have to pay the bills.
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Merry Christmas to everyone and their families. Let’s all be thankful for what we have, and look forward to an amazing 2023.
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TSLA’s NVDA moment will be when everyone realizes megapacks is a $20B/year business (2023 Energy revs $10B). We’ll get a quarter where Energy revs explode due to megapack installs and $TSLA soars 10% or more.
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Ron Baron’s $4.5T $TSLA valuation over the next decade is quite realistic. He assumes 20M cars @ $50K ASP @ 30% operating margin = $300B operating income x 15x EV/OI = $4.5T. That excludes robotaxi, bots, batteries, everything except EVs. @elonmusk tesmanian.com/blogs/tesmania…
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As usual, @CGrantWSJ is being intellectually dishonest in his click bait WSJ headline that $TSLA makes more money trading #btc than it does selling cars. It’s not only a lie; it’s off by a factor of 4x. Intellectual integrity doesn’t apply when it comes to the @WSJ TSLA coverage.
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There appears to be a strong chance Austin opens next week. $tsla
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There’s been almost no hype about tomorrow’s $TSLA Semi delivery event at TSLA GigaNevada plant. I expect Pepsi to take delivery of 5-10 trucks with 500mi range. We assume 50K delivs in 2024 ($.50/sh EPS). Elon could confirm Cytruck final design and “epic 4Q” comments tomorrow.
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I’ve never seen a double GigaGordon before. We need a new name for today’s $tsla move.
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When Cybertruck comes out next week, it will be the biggest people magnet vehicle we’ve ever seen. Wherever Cybertruck goes, people will surround it, take selfies of themselves on it, next to it, and inside it, and post them on social media for all the world to see. If you can’t see that Cybertruck will spark a huge halo effect of interest in the entire $TSLA franchise unlike any vehicle we’ve seen in years, you really don’t have a clue about how social media works. @MartinViecha @elonmusk
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S Plaid event was amazing. Test drive felt like a rocket. 0-60 in <2 sec, 0-100 in ~4 sec. Took the turns better than any car I’ve ever been in. For $129.9K there is nothing else out there like it. Plaid is the new Turbo. Will provide halo effect for entire $TSLA brand.
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I’ve been wrong on $TSLA for three years now. TSLA has been my worst performing long during this time frame: down -19% vs +32% for NDX overall.
On the positive side, I got FSD right: That it would not to get to L4 for many years after Elon predicted FSD would drive itself and so I always assumed zero value for Robotaxi in my valuation. And FSD take rates have remained in the low teens even as FSD has improved significantly as a driver assist tool. I estimate FSD currently adds $.14/share to 2024 eps assuming a 12.5% global take rate, which is likely too rich.
Where I was wrong was on sharply decelerating TSLA volume growth - TSLA volume growth has slowed despite massive price cuts and EV credits. TSLA is now looking at just +15% YoY vol growth in 2024 (vs +38% YoY in 2023) including +13% in 1Q. Where I’ve been massively wrong is not anticipating that TSLA would start a price war, which has caused TSLA 2024 and 2025 earnings power to collapse (-45% over past 12 months). This has been my greatest research mistake. I always thought the $25K “model 2” could satisfy the affordability issue in MP-1 but the $25K vehicle continues to get pushed back (now late-2025 earliest) so price cuts to drive volumes were in hindsight inevitable.
Looking forward I still think I will be vindicated on $TSLA (my PT remains $290) because other EV makers will either give up or cut back on their EV investments. That said, further TSLA price cuts would crush my investment thesis that auto gross margins bottomed at 16.3% in 3Q and are now headed upward as TSLA mgmt learns that they got little from last year’s price cuts. As modest TSLA bull and my fellow Chicagoan @thejefflutz advises, TSLA COGS declines are kicking in big this year.
Last point: When I make a bad trade as I have with $TSLA, I have only myself to blame. The shorts have done little to cause $TSLA price to decline; the damage to the stock has been largely self-inflicted which I should have foreseen. As we move forward we hopefully learn from our mistakes and that applies to TSLA management as well. I still believe TSLA can get to my $290 PT but that requires management to learn how to use marketing tools other than price to drive volume, which may be a bridge too far. But I am optimistic and remain a $TSLA bull.
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It takes a lot for me to block someone. If you accuse me of spreading FUD (we don’t; we try to explain how the market is interpreting data and news) or accuse us of bashing @elonmusk (why would we? TSLA is our largest position), or attack me personally, I will block you.
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$TSLA will be delivering 15 pre-production Semis to Pepsi for testing by end of Jan at Pepsi’s Modesto CA FritoLay facility. The TSLA Semis were built in Giga Nevada and will use new 4680 cells. Pepsi is installing several Megachargers at the facility.
teslarati.com/tesla-semi-fir…
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Anyone short $TSLA needs to have their head examined.
- EVs are a great business (15% EV adoption today, going to 60% by 2030).
- TSLA will launch a $25K vehicle in 2025, significantly expanding its TAM.
- TSLA will solve generalized autonomy first, worth potentially $5T.
- TSLA will use all its learnings from Robotaxi to launch Optimus robots which could by itself be worth $20-$25T market cap.
Autonomous vehicles: 100M vehicles market x 10% share = 10M veh/year x $50K price, $30K cost = $200B profit/year x 25x P/E = $5T value
Optimus: Market demand for robots 1 billion per year, TSLA captures 10% market share, Price $20K per robot, Cost $10K per robot, $1T profits (100M x $10K each), 20-25x multiple = $20-$25T value
😂
Once Tesla fully solves autonomy and has Optimus in volume production, anyone still holding a short position will be obliterated. Even Gates.
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Yesterday’s attack on $TSLA was a professional hit job, run by shorts on a dumb journalist, with a willing accomplice CNBC.
Other than @jimcramer, who has successfully run money, DO NOT LISTEN TO CNBC when it comes to $TSLA. The others are just talking heads.
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I talked to my $TSLA sales contact here in Chicago this morning. He told me M-Y RWD orders are “huge” and most buyers don’t care about 0-60 taking 6.6 sec. The big questions are about range, how long it takes to charge, cost of charging, and maintenance costs. He told me he gets almost no questions about autonomy.
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Media incorrect in saying $TSLA will lay off 10% of its workers. Probably 60% of TSLA’s 100K workers are Mfg/AI/FSD which are off limits. So maybe 4-5% of workers will exit. Media also ignoring last line that “hourly headcount will increase” which means production will increase.
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Hallelujah! Skeptics said @elonmusk had no legal grounds to walk away. Misrepresentation of financial statements is sufficient grounds. Delaware Court will decide. $tsla reuters.com/technology/elon-…
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