Tesla reported earning on 26th Jan 2022 and despite beating estimates with record delivery and more than $2 billions in profits, Tesla’s share price closed 11.55% lower on the following trading day (27th Jan 2022).
This is an enlightening 38-minute video where fund manager and long time Tesla bull Gary Black explained why Tesla’s share price dropped after a stellar quater of earnings.
If you do not have the time to watch this video, this is a summary of what was covered:
The $25,000 Tesla car, which investors were expecting was not the focus for Elon Musk come 2022 and 2023. Instead, the Optimus humanoid robot aka Tesla bot will be the priority for Tesla this year.
The change in focus from EV (Electric Vehicle) to robots worries portfolio managers, and as Gary Black describes, is akin to Tesla going into the restaurant business.
It will be difficult for portfolio managers to put numbers to Tesla’s future balance sheet because there is so much unknown about robots, such as the TAM (Total Addressable Market) or the functions that the Tesla Bot will serve.
Much has been said about Tesla being more than just a car company. It has the energy segment, FSD (Full Self Driving), insurance and in the future, they will finish developing their own 4860 battery that can significantly reduce battery costs, deliver the highly-anticipated cybertrucks and create the robo taxi fleet due to FSD being fully functional and widely adopted.
However, it is worth noting that Tesla’s solar energy segment is still not profitable and has lost $50 millions in Q4. Also, Tesla’s FSD is not the monopoly in the market as there are other competitors such as Waymo, Mobileye, Cruise, all trying to get ahead of Tesla in autonomous driving. Mercedes-Benz has achieved level 3 autonomous driving (hands-free on the highway) as compared to Tesla which is at level 2. Tesla’s FSD take rate is also declining whereas the price is set to increase.
As investors are now in risk-off mode due to fears over interest rate hikes, recession, negative GDP, they are likely to stay away from high P/E stocks such as Shopify, Nvidia, and Tesla, unless Fed changes their mind and become less hawkish with regards to raising interest rates.
Gary Black reiterated that his price target on Tesla remains unchanged at $1,600 for 2022 as demand for Tesla’s vehicles remains high and they are ramping up production through their factories. Also, the world’s EV adoption is only at 6%, which means there is still a huge market ahead for Tesla.
Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading
The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread
Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:
Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)
I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day
I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021
This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months