Why Tesla (TSLA) Will Lead Tech Stocks

let's bring in Gary black manager partner of the future fund and I'm sure loving the big Tech strength as much as anybody of course including and not limited to though Tesla's big run-up because you're a big Tesla bull Gary and I know you haven't changed your thoughts about it at all right nope we're still bullish here even though uh you know it's up 110 year-to-date but it had a bad you know 2012 but you know they're going to have good second quarter the volumes will come out in a couple weeks it'll be up 75 percent year over year the Cyber truck is coming probably in third quarter which is a little early and everybody's talking about as an AI play they've been uh investing a lot they're going to start licensing their Dojo supercomputer uh probably next year they're setting up a separate business unit we believe so that gives it a little bit even more spark so we're still pretty bullish on it even though it's up at about 52 times next year's earnings but it's growing at 35 percent so it doesn't look expensive the way we look at it price earnings to growth we think it's still a relatively cheap stock we like it what do you think could be within the realm of possibility for Tesla stock could we be seeing all-time highs again in this company you know we're still down from where we were um you know back Remembered in fourth quarter Elon had to sell about 23 billion of his of his Tesla stock to buy Twitter and he had all this discounting going on in China and in the U.S revisions to to make the stock go to a new high which we think is possible you've got to get revisions to turn around uh meaning earnings estimates have been dropping all year because they took pricing down in the first quarter and they've stabilized and that's why the stock has had an amazing run since about May 15th or so because people believe that the second quarter gross margins or the trough because we haven't seen any price Cuts price Cuts pricing has actually been stable as we mentioned people are getting excited about the Cyber truck the last time they had a new product like this was in 2020 when they introduced model Y which is a crossover um and a stock as you know went up Sevenfold in 2020 versus I think NASDAQ was up about 50 percent so we think that's what you're going to get everybody's going to be very excited when cyber truck delivery started very unique looking now if you've ever seen one up close but it's about as big as an F-150 it looks like it belongs on Mars but people are going to see it and then they're going to go to the Tesla website or go to the Tesla store and buy a model 3 or model y that's what happened with model y it just stimulated interest in the Tesla brand and we haven't talked about all these EV charging um uh Arrangements between GM Ford now Arabian yeah everybody's on board the whole industry is getting behind the Tesla Max standard that's probably worth another 20 cents a share we think the Cyber truck because the street is underestimating it is worth about 60 cents a share so we think estimates for 2024 Street estimates are about 70 80 cents too low and we think we'll start seeing people get more excited about Tesla as we get to the back half the year and cyber truck comes out now that's interesting that Morgan Stanley downgraded today um you know it was a surprise to me that he he took his price Target up but he downgraded something he took him earnings estimates up so that's not usual usually when people take earnings estimates up but price targets up they don't downgrade the stock but you know maybe he was just getting tired of it who knows the companies uh been important um to your uh fund the ffnd ETF the future fund ETF year to date of 26 whereas Tesla as a percent to that fund at this point uh Gary give us an update and then also do you though still have a fund that is uh dependent on a company concentrated on a company here that obviously last year got slammed yeah so Tesla is about 10 of the portfolio today okay I took a day on actually before first quarter earnings because we thought the estimates were too high because of the price Cuts we we and the stock at the time the stock was about 180 and then we bought back about half of it at 168 not that we were day trading but we thought the estimates hadn't come down enough and then the annual meeting happened and we just felt very optimistic that Elon wasn't going I remember there was some debate that you know maybe he would go to Twitter and give up uh Tesla he see he hired Linda yaccarino to run Twitter which is great I know Linda I've talked to her many times she'll be great so we think there's less of a chance that he'll have to put money uh into Twitter because we think she can turn this around you've got 2024 for Twitter you've got the election you've got the Olympics so they should be cash flow positive by the end of the year and she's a very strong media operator so we feel good about that um distract Elon correct and he's not going to put money in which is the most important thing but more importantly you know to your point we we think that it's it's earnings can start turning around here because the pricing has firmed up cyber truck's going to be huge the charging um you know contracts that they've set with GM and Ford and Ruby and probably uh stalantis is next and maybe Toyota will be very good for for for Tesla and in the meantime we still have you know the IRA credit just went into effect this year with 7 500 Tesla's getting on its model 3 and model Y which are 90 of its volume so we think there's a lot of information out there that is still not being Incorporated to Tesla stock so we're keeping it at about a 10 way you know we do worry a little bit about um you know the economy right I heard you before that if if the recession hits because the FED insists on continuing to raise rates as Powell has talked about the last two days you know a recession will hurt the Auto industry and all her Teslas so that's probably the biggest risk that the FED does something stupid and keeps raising rates here okay well the last part there of course your own opinion inserted maybe fighting inflation is the smart thing long term even if it means Tesla going down another two-parter for you real quick Gary number one is do you think there are price Cuts in the six month to year-long future for Tesla's cars like it did uh earlier this year and late last year and number two uh is that a sign if it happens that things are softening on the margin I don't think we're going to have more price cuts on model Y which is where all the volume is that's now become the best selling car when truck in the United States even even not just EVS all cars and the inventories are very low we track the inventories every day we can see them and the inventories around the world are pretty low so we don't see that what we are seeing for the second quarter there's some inventory discounts on model 3 Model S and X which again that's not the same as a price cut because once the inventory is gone or at least depleted then the price Cuts go away so we are seeing some of that as we end second quarter but I think that that goes back to our investment thesis second quarter will be the trough and gross margins gross margins at Tesla the auto gross margins we're about 30 percent last year they dropped to 19 after the price Cuts in first quarter this this quarter we think they'll get down to 17 and then we see a gradual increase back into the 21 22-23 range we've already seen price increases on model y you know since April as the inventories have fallen so I don't think we're going to see price cuts um you know again if if and the other thing that's really important is the Ed credit goes from being a tax credit this year to an instant rebate next year and so that means you could walk into a Tesla store take 7 500 off and when you're coming up with your loan payments it's based on a 7 500 lower price versus a tax credit you got to wait for your income tax return and then you get the credit back it's you see having an instant rebate off the purchase price is so much better and that kicks into play January 1st of 2024. so there's really no need for a price cut I guess at this point normally okay uh hey uh real fast you also launched a long short fund um can you give us the uh kind of a 60-second elevator pitch on how you're going to run it so ffls it's it's very unique there aren't many fundamental driven bottom-up long short ETFs out there it's high conviction we have 30 Longs 20 shorts and we play off the same Mega trends that we use on the long side same research okay where we're looking at you know 24 7 information entertainment climate sustainability Big Data people living longer lifestyle betterment so when you see a short it'll usually be something that's getting hurt by those Mega Trends so good example is Toyota it's our largest short Tesla's our second largest long Google's our number one long um but Toyota's got 10 of the market in globally and they are nowhere in EVS so as EV adoption continues to rock ahead it's 10 percent at least it'll be 15 this year globally we think it'll be 60 by 2030. they're nowhere in EB so it's it's our largest short and so we're trying to you know look for offsetting Hedges because back to the market we think the rest of the year is going to be pretty choppy the FED isn't sure well we don't think said even though they sound short we don't think they're sure they're going to actually raise rates the rest of the year and so as we go through this choppy period unlike the first exercise is this the first time that I can remember as an investor well we don't have really good clarity about what the fed's going to do they say they're going to raise rates by another 50 base points but and that's what the Dot Plot says but we're not sure because inflation is coming down sharply when you get to June you're going to have year-over-year CPI down at about three percent uh GDP right now it's estimated to be one and a half to two so as we get into the July meeting with inflation coming down GDP coming down the and and still systemic risk out there you still have Banks struggling because you've got money market rates of five to five and a half percent and they're paying one and a half to two percent on deposits so you still have the risk that the more they raise the more that deposits could go out the banks uh you know deposit window and so as a result of that you got a lot of systemic risk out there so I believe as we get into the rest of the year you'll have the economy choppy okay at the economy shopping a a fund that that Hedges its Longs with Alpha shorts and we're promising not promising we're targeting you gotta be careful we're targeting s p returns with half the risk because we are shorting we're we're looking about a hundred percent long today we're about 40 short so our Net's about 60. okay that net number can go between 40 and 60 percent based on our view about the economy okay and the markets we're pretty bullish right now about the market so we feel pretty good about it ffls is the Ticker on the New York Stock Exchange all right thanks Gary we got John appreciate it Gary black managing partner of the future fund

Channel: TD Ameritrade Network

Views: 32,529

Keywords: Retail

Id: s3o-GAJlQ-w

Length: 11min 9sec (669 seconds)

Published: Thu Jun 22 2023