We are still pretty bullish on Tesla stock, says Future Fund's Gary Black
Watching Tesla shares this morning down about a percent as the company cuts prices of the Model S and the Model X for the second time this year Our next guest is buying some more after cutting back a day before the investor day Tesla shareholder future fund managing partner Gary Black joins us today Gary great to have you back We haven't had a chance to discuss investor day and sort of that cloud of so-called disappointment that the market at least seemed to reflect What did you think was at work then and what do you make of the price cuts today? I would say the more you watch the video on investor day the more bullish you get I think the market it was definitely gonna be a sell on the news event because the stock was up a hundred percent in the two months before investor day So obviously some people taking profits and I'd say it was just you know long-on aspiration short on tangibility and I think you know there were a lot of people that were playing the stock that were waiting for a big unveil of Something we didn't expect an unveil because as you remember with model y You don't want to get too far in front of an unveil because then you get as we call an Osborne effect on the existing products Right everybody's gonna wait for the new product. They're not gonna buy the existing product So no we didn't expect an unveil, but I think I guess some people did I think the positive from investor day and again Watch the four hour video including Q&A. You can't help but be bullish They reiterated a target of 20 million Deliveries by 23 that would be 24% share of the market They'd be by far the biggest auto manufacturer if they get now that's aspirational But they gave you a roadmap of how to think about and this is the second point how they could cut costs by 50% Which allows them to go into the mass market, which is about 50% of the market And if they took you through looking at power train cuts battery cuts general assembly cuts They announced that day that they were gonna open up a new plant in Nuevo Leon, Mexico We're a labor cluster chief and they could take full advantage of the $7,500 IRA credit And they could export into Brazil and other Latin American countries where Mexico has tariff treaties So I came away extremely bullish I felt that you know the breath one of the concerns I've always had is you know, it's an Elon Musk company But you saw there must have been 15 18 people up on the stage that gave you a lot of confidence That there was a really broad in-depth management team if Elon were to ever disappear not that he's going anywhere Other positives cyber truck is coming this year Cyber trucks gonna be huge. There's a million three-foot orders I think the street next year for 2024 is about 90,000 if they actually get this thing launched this year Which it I think the confidence level should be high now if they could do even 200,000 Deliveries next year with cyber truck. That's worth about 40 cents a share and then the whole energy side business Nobody pays attention to it. They have this new facility that came on a third quarter in Lathrop, California They can do about 10,000 mega packs per year These things sell they just raised price over the weekend again It was a two-year backlog if they could sell even 10,000 of those at let's call it two and a half million dollars each Which is what they go for that's worth about another 50 cents a share And so that's a dollar or share more than the street is putting into their models today And that's why we're still pretty bullish on the stock And that's why we bought when the market, you know punished it after investor day.
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