TSLA Earnings Thoughts, Meta LLaMA, Renting v. Owning, And Much More

Below is the transcript from today’s Live Q&A Chat. And in case you missed it, be sure and check out the recording of our Tesla Earnings Livestream from last night. We’ll be doing another Livestream for Apple’s earnings call next week (Thursday, May 2nd at 5:00 pm ET), which you can watch on our Twitter, Facebook, or YouTube pages.

Q. I read a few takes on this recently but curious your thoughts. For how long can the government afford to pay as much interest as they are paying to service their debt and at some point does that factor into the decision to cut rates? Publicly that can’t be the stated reason, but if we start seeing even slight improvements in inflation or other measures, will they start looking for an excuse to cut? Or is that not a factor?

A. For my entire career, the permabears and many economists have been predicting that the government won’t be able to fund itself and that the US dollar and the US economy are doomed at some point. And yes, there is a breaking point to all of this, I’m sure. And yes, with debt to GDP levels being at historic highs it’s more likely than ever that the US government runs out of money at some point sooner rather than later.

But I don’t think we do ourselves any favors by trying to anticipate that crisis developing near-term and that we probably will have real opportunities to try to figure out how to protect our wealth and our families if the collapse comes in our lifetimes.

Q. Any buys today?

A. In the hedge fund, we bought a little bit of iShares Bitcoin Trust (IBIT) back in the hedge fund today, in large part because we have puts on bitcoin miners that we have slowly been reloading on earlier this week. Also in the hedge fund, we bought a few Invesco QQQ Trust Series 1 (QQQ) puts dated out to next week and slightly out-of-the-money just to get some hedges on into these highly-anticipated tech earnings this week.

Q. And any sales today? Uber Technologies (UBER) and some of your Tesla (TSLA) calls – any others?

A. No.

Q. Any earnings play that you like (not necessarily suggest, I understand lol)?

A. I liked Tesla (TSLA) into earnings as I’d noted and was buying it before the report as noted. I think the bar is set low for Intel (INTC) but if they don’t take market share from Advanced Micro Devices (AMD) the stock might not pop. Robinhood Markets (HOOD) might be a pretty good report and it might get some momentum going if it is. Likewise, I would think that Coinbase (COIN) is going to have a blowout quarterly report when it reports in a few more weeks (that said other than bitcoin, I’m very bearish on all cryptos right now though). On the other hand, Microsoft (MSFT) and AMD have high bars set for their earnings reports and I don’t know if they’ll be able to meet them.

Q. It wasn’t easy buying Tesla (TSLA) at $140, it was a hard trade in the face of an avalanche of negative sentiment.

A. Amen, it was hard. The hardest trade is usually the right one. That said, it’s not over yet. The company needs to execute on the new cheaper model for next year to keep this stock from testing new lows again and they need to deliver Robotaxi and Optimus to really make this stock go up. I’d probably buy more around $140 again if it gets back there.

Q. What should we do now with Tesla (TSLA)? Sell the news? Would love some quick insight on this already huge position after everything that was said. Think this bleeds lower from here or does the reversal begin?

A. We sold a few calls in the hedge fund today but we are sitting tight with the large common stock position we have in TSLA.

Q. What’s your overall take on Tesla (TSLA) earnings and where do you see the stock going short- to mid-term?

A. Feet-to-fire I expect Tesla will bounce around between $150 and $170 for a few weeks and then, as long as the broader markets are steady or uppish, TSLA could get over $200 by the end of the summer.

Q. Elon stating that 2024 revenue would be higher than 2023 was a surprise given that most estimates are for a decline in 2024 revenue. The dynamic of the onslaught of Chinese EV OEMs with new and low-price models against the constant lowering of Tesla prices will be interesting. Profitability in EV OEMs is like a flick of a switch. Tesla has a negative free cash flow in Q1 for the 1st time in ages. The potential of robotaxi and FSD are huge IMO not only to increase the demand for Tesla, but also in disrupting multiple industries. Uber Technologies (UBER) would be at a crossroad. Will the need for the number of automobiles be reduced dramatically? Elon saying vehicles without (L4-L5) auto drive will be obsolete is so true IMO. While I believe FSD still has a ways to go including incorporating necessary GPS-based edge cases (dangerous sections of rdwys) solutions, Tesla FSD seems to be leading in the AV race (as observed on FSD V12.) Claims by Chinese OEMs on AV superiority are yet to be ratified. Timing is essential.

A. Technically, I think he said that deliveries would be up, not that revenues would be up, but either way, it was a surprise to Wall Street that he thought the company will grow in 2024 after the decline in deliveries and revenues year over year in the first quarter. Uber’s in a bit of trouble if Tesla does roll out its own competitive ride-hailing app that they previewed in the press release last night. Great point about the GPS-based edge cases and dangerous sections of roadways — Bryce and I have seen our Tesla FSD struggle in certain edge cases where the roadways are not marked well. Not sure GPS is the answer, but there has to be some sort of answer for the FSD to truly get to Level 5 autonomy and for a car to be able to drive itself around without a person in it at all. The Machine Learning approach that Tesla has finally gotten to last year with the advent of the Nvidia (NVDA) AI chips and billions of dollars of investments by Tesla is probably going to crack Level 5 without GPS. We’ll see though. Tesla stock is rarely “steady as she goes” but I think we should mostly just keep ourselves as steady as we go with this stock for now.

Q. Not necessarily an investment question, but if you were buying a Tesla (TSLA) car today, would you lease or buy? Would you pay for FSD upfront or monthly? Just want to get your general take as to how often you would want to refresh the hardware, as Elon was talking about HW4 & even HW5 already.

A. I’d buy and I’d pay for FSD upfront.

Q. I read the Tesla (TSLA)/Uber (UBER) writeup from last week. It seems like UBER is dropping today on the Robotaxi concept. Does UBER actually have more downside risk than we think? Could Robotaxi severely impact the thesis on UBER?

A. Yes, UBER’s got some downside risk if Tesla successfully rolls out a Robotaxi (Tesla’s calling it a Cybercab) service. Uber has gotten to be a very big position for us and we have trimmed it down a bit lately including a little bit more today. Still a pretty big position and we are definitely trying to get our arms around how this will all play out for UBER. The biggest concern isn’t that Uber loses its business per se but also that pricing power will evaporate if Tesla’s got driverless cars driving people around.

Q. How concerned should Uber Technologies (UBER) be about Tesla (TSLA)? I take what Elon says with a grain of salt, since his timing predictions always seem to be off by years. With that being said, self-driving is only a matter of time so how/can Uber compete?

A. My thought has always been that Uber would load up on a bunch of FSD Tesla Cybercabs to keep competing against Tesla, but if Tesla is really going to roll out their own ride-sharing service inside the Tesla app, Uber’s got some risks here. We’re still trying to get our heads around this and will be writing more as we muddle through our long-term Revolution Analysis on this subject.

Q. What’s your take on the Meta (META) earnings report tonight? Think it will beat with all the high expectations, AI etc?

A. I’m a bit worried that META is set up exactly opposite of how TSLA was set up into its earnings. That is, Tesla was widely hated and had been absolutely crushed all year as it reported numbers that missed even the lowered expectations but were much better than the whispered and most-feared numbers — and Elon said the things Wall Street wanted to hear about a cheaper model coming out soon — so the stock went up 10%+. Meanwhile, META’s been on fire for a long time and expectations for a blowout quarter are quite high. I think META will report a beat on top and bottom lines but that the stock will probably be flattish or down maybe 3-5% tomorrow if they don’t blow the expectations away. I think META and Tesla are the best-positioned AI companies right now and they both have some trillion dollar kickers (Meta with Llama and other AI-related services and its VR headsets/sunglasses).

Q. Thoughts on Meta (META) Llama?

A. It’s amazing. It’s open source. It’s going to get more amazing. It’s going to get less open-source. It’s going to help Meta monetize all that data we all have given Meta over the years even more. It’s going to help Meta create personalized AI agents for its billions of users.

Q. I read so many positive articles about Rocket Lab (RKLB). People are clamoring to get into Space X, but yet here’s Rocket Lab suffering at $3.60/share. I’m perplexed as to why it hasn’t taken off (no pun intended). Is there massive short interest that keeps knocking it down?

A. There are certainly some shorts in RKLB. Right now short interest in the name is about 15-20%. That said, I don’t think the shorts are to blame for the stock being at $3.60. High short interest can actually be a very bullish thing for a stock as the shorts eventually have to buy. Tesla had 25-30% short interest when I first loaded up on it in 2019 and I wrote at the time about how I loved to see the high short interest in it. Rocket Lab has to keep growing, executing, and eventually start kicking out some profits just like Tesla had to in 2019-2021 to get the shorts out of the name. I think Rocket Lab is going to pull it off, but competing against SpaceX ain’t a cakewalk either.

Q. What do you expect from Robinhood Markets (HOOD) earnings and Transmedics Group (TMDX)?

A. See earlier commentary about my expectations for Hood earnings. As for TMDX, I expect to see a report that shows continued strong growth and margins.

Q. Thank you for your continued analysis and insight. It is a true joy to read and follow your thinking process. With regards to STMicroelectronics (STM), you sold it on April 15, at around $41/share. Would it be a good idea to get back into it now that it is around $38.60/share? Or shall we wait until after the Q1 earnings are announced on April 25th?

A. I’m not looking to buy STM back right now as we made the hard decision to sell it to reduce the number of positions in the portfolio. I still like the company and the valuation here, but I can’t own ’em all.

Q. Any update on the Autodesk (ADSK) investigation and if you’re looking to re-purchase?

A. The news that’s trickled out of Autodesk about their fishy financials hasn’t been great since we sold the stock. No reason to buy it until they get this investigation cleared up and confirm that their gross margins and revenues are being reported correctly.

Q. The ol’ Unity Software (U) has dropped a bit since it was jettisoned from the portfolio. Current thoughts on U?

A. We just can’t get excited about their ad business. We love the gaming/video engine. I’m not looking to buy this stock any time soon because of that ad business though.

Q. First, I want to thank you for the complimentary subscription as a service member. It is incredibly helpful to plan and prepare my finances. Second, I wanted to pick your brain on whether or not to buy or rent a house. As a military member, I’m required to move about every 4 years, and I will have another move this August to Northeast of California’s Bay Area. The biggest question right now is whether to invest in a house or to just rent and continue to grow my current investments. With current interest rates, I would not be able to buy a house, however I would be able to assume someone else’s VA loan. It would allow for a lower interest rate, but a large upfront payment to cover the gap. So, is it worth putting that large down payment into a house (almost my entire savings) to make for $2600 a month on a mortgage, or continue to invest that lump sum and spend $3500-$4k on rent? I would hate to buy a house only for it to depreciate when I could have just rented and been making at least 5% APR in a high yield savings. Thanks in advance for the help. Looking forward to today’s chat!

A. You’re welcome and thank you for serving our country. I’m happy to give active military members a free subscription while they are serving our country. I don’t have an easy answer for you and a good answer would probably require a much more detailed conversation about your finances, your savings, your income, your inheritance possibilities, your family demands and needs and so on. There’s risk in buying a house and I never did buy a house while I lived in NYC because I was always thinking that one day I’d move back to NM. The fact that you’re going to likely be moving in less than five years is probably a good reason to rent but again, it depends on a lot of factors. If you’d like to send in more details about yourself and your finances and family etc, I’d be happy to write a more detailed answer and will also share it with my subscribers so they can learn from our further discussion. Good luck!

Q. Is there an easy way to check the current price of SKTLs?

A. Just google “SKTL Crypto Price” and visit the pages that Google displays.

I leave you all with a picture of me getting some love from our two year old horse and one of his goat sidekicks who love to follow me on my bicycle. Coltie (aka Toto — his mother is Dorothy) loves for me to rub his throat and will darn near tackle me on my bike or chase me in my Tesla to get those rubs.