A Visionary Proposal: Gary Black, Managing Partner at Future Fund, has ignited a fervent debate with his recent suggestion to Tesla Inc to consider a bold move – introducing a fourth segment in its earnings reports dedicated to Artificial Intelligence ventures. A move that could turn investor heads and cause whispers to ripple through the financial world.
The Strategic Shift: In its current form, Tesla’s earnings are divided into three segments: automotive, energy, and services. By weaving AI into the narrative as a significant fourth segment, the company stands to draw greater attention to its cutting-edge AI initiatives – from the full-self-driving (FSD) project to FSD licensing, robotaxis, Optimus, and Dojo. Gary Black emphasized that this strategic pivot could not only captivate investors but also possibly enhance Tesla’s valuation.
“Today, we estimate FSD is only $1B revs (out of $100B total revs) so likely not significant enough. But a segment that includes FSD, FSD licensing, robotaxi, Optimus, and Dojo would get a high P/E and could be measured and tracked by investors, which would be additive to TSLA’s valuation,” Black highlighted.
Strategic Price Hike: Amidst the buzz around the proposed AI segment, Gary Black also navigated recent conjecture surrounding Tesla’s surge in stock price. Pushing back on the narrative that the spike was solely attributed to the positive reception of the new FSD release, Black posited that stock prices ride the waves of enhanced earnings and cash flow.
Citing Tesla’s announcement of forthcoming price increases in the U.S. and Europe over the weekend as a pivotal catalyst for the stock surge, he underscored the significance of strategic price maneuvers in Tesla’s ecosystem.
“The Road Ahead: As Tesla gears up to increase the price of its popular Model Y SUV in several European markets and in the U.S., the company is strategically positioning itself for growth. By bolstering starting prices and signaling market shifts, Tesla is not just signaling a price adjustment but evolving its financial narrative.”
The absence of a dedicated AI segment in Tesla’s financial reports has left many investors pondering the true depths of its AI and robotics prowess. Gary Black’s vocal advocacy for impending price hikes as a welcome challenge to Tesla’s profit margin woes sheds light on a path not solely dictated by past practices
Despite his enduring belief in Tesla, Gary Black recently opted to trim his Tesla holdings, citing a perceived wane in the company’s long-term earnings capacity over the past year. A testament to the ever-evolving landscape of the market and the discerning eye of seasoned investors.
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