Evening Stock Market & Crypto Livestream 4-3-2024
TLDRThe transcript discusses Deutsche Bank's analysis on Tesla, highlighting concerns over flat volume in 2024 and limited free cash flow. It also touches on Tesla's revenue projections, gross margin adjustments, and lowered earnings per share estimates. The speaker further compares Tesla's performance with other automakers and discusses the potential impact of a market correction on Tesla's stock. Additionally, the transcript covers various topics, including the rise in gold prices, the Middle East tensions, and the political landscape in the US, emphasizing the need to watch the main channel for more in-depth analysis on wages and potential inflation issues.
Takeaways
- ๐ Deutsche Bank expects flat volume for Tesla in 2024 and limited free cash flow, which could be a potential risk factor.
- ๐ฐ Tesla's Q1 revenue projections were lowered and gross margin adjusted to 13.5%, reflecting lower volume and ongoing factory expenses without matching revenue.
- ๐ The full-year volume for Tesla in 2024 is predicted to be 1.84 million vehicles, indicating only about 2% growth.
- ๐ Tesla's 2025 earnings per share (EPS) are lowered to $215, leading to a high PE ratio even with a recovery to 20% growth.
- ๐ Discussion of other electric vehicle manufacturers' sales performance in Q1, showing that Tesla's challenges do not appear to be industry-wide.
- ๐ก Elon Musk's idea of licensing Tesla's FSD software to other automakers has been mentioned before but no takers yet, raising questions about its feasibility.
- ๐ Gold broke $2,300, which is unusual as it typically rallies when the 10-year real yield is low, indicating a potential shift in market sentiment.
- ๐๏ธ Trump's legal battles involve financial agreements with restrictive terms, highlighting the complexities of high-profile business arrangements.
- ๐ค Apple is exploring the development of personal robots and other devices, showing their continued interest in expanding into new technology areas.
- ๐ณ๏ธ A Wall Street Journal poll suggests that Biden is falling behind in six out of seven swing states, with Trump leading on key issues like the economy and inflation.
Q & A
What is Deutsche Bank's expectation for Tesla's volume in 2024?
-Deutsche Bank is expecting flat volume for Tesla in 2024.
What is a significant area of contention for Tesla that investors should pay attention to?
-Free cash flow is one of the biggest areas of contention for Tesla that investors should monitor closely.
How does the speaker view Tesla's current free cash flow situation?
-The speaker views Tesla's limited free cash flow as a potential risk factor, as it could lead the company to raise more money.
What was the market's reaction to Tesla's Q1 performance?
-The market had a moderately negative reaction to Tesla's bad Q1, reflecting investors' increased understanding of the company's near-term challenges.
What does the speaker suggest about the broader market in relation to Tesla's performance?
-null
What is the speaker's perspective on Tesla's full self-driving (FSD) technology?
-The speaker believes that proving the capability of Tesla's full self-driving technology is key to a meaningful upgrade in earnings per share (EPS) for the company.
What is the speaker's view on Tesla's price target and PE ratio?
-The speaker mentions that Deutsche Bank lowered its price target for Tesla to $189 based on 2027 EPS estimates and notes that the current PE ratio is high, even considering a recovery to 20% growth.
What does the speaker think about the claim that Tesla is ready to license its FSD software to other automakers?
-The speaker is skeptical about the claim, as it has been made before without any takers, and points out that even the Cybertruck does not yet have FSD capabilities.
What is the speaker's outlook on the stock market in relation to potential economic indicators?
-The speaker believes the stock market is poised for a near-term correction, which could be very painful for certain specific stocks, especially considering upcoming jobs and CPI reports.
What is the speaker's opinion on the performance of Bitcoin (BTC)?
-The speaker observes that Bitcoin is having trouble staying above a certain trend line, which they interpret as a potential red flag for risk assets.
What does the speaker suggest about the current state of the US economy?
-The speaker suggests that the US economy is in a great place overall, but expresses concern about rising wages and the potential for a wage price spiral leading to longer-term inflation issues.
Outlines
๐ Deutsche Bank's Analysis on Tesla's Financial Outlook
The paragraph discusses Deutsche Bank's analysis of Tesla's financial situation, highlighting expectations of flat volume in 2024 and limited free cash flow. It emphasizes the importance of Tesla's free cash flow, which has been a contentious issue. Deutsche Bank's revenue projections for Q1 have been lowered, and the gross margin has been adjusted to 13.5% to reflect lower volume. The bank has also cut its full-year volume forecast for 2024 to 1.84 million vehicles, indicating a 2% growth, and has baked in an 8.6% price decline year-over-year. The earnings per share for 2025 have been lowered to $215, leading to a high PE ratio even with a recovery to 20% growth. The paragraph also touches on the potential risks for Tesla, including the need to raise funds due to limited free cash flow and the impact of market corrections on struggling companies.
๐ Industry Sales Comparison and Gold's Unusual Rally
This paragraph compares Tesla's sales performance with other major automotive companies, revealing that while Tesla experienced a year-over-year negative growth, other companies such as Nissan, Toyota, Honda, and Ford showed positive growth. It also addresses the claim that Tesla's issues are industry-wide, which the data does not support. Additionally, the paragraph discusses the unusual rally of gold despite a low 10-year real yield, suggesting that gold might be pricing in Fed rate cuts or negative market sentiment. The conversation then shifts to oil prices, with mention of OPEC's production cuts and the impact on global oil prices.
๐ค Trump's Legal Battle Over Business Setup
The paragraph delves into the legal dispute between Donald Trump and the people he hired for his business, over expense reimbursements outlined in their services agreement. It mentions that these individuals are now claiming about 88.6% of DJT, a company part-owned by Trump. Trump currently owns about 53% of DJT but is under lockups for another five and a half months, preventing him from accessing some of his assets. The paragraph also briefly touches on other topics, including Elon Musk's strategy regarding Tesla's FSD software, competition in the AI space, and Apple's exploration of personal robots.
๐๏ธ Biden's Declining Approval Ratings and Middle East Tensions
This paragraph discusses a Wall Street Journal poll indicating that President Biden's approval ratings are falling behind in six out of seven swing states. It highlights the issues Biden leads on, such as abortion, and those he lags on, including mental fitness, physical fitness, the economy, inflation, and immigration. The paragraph also mentions tensions in the Middle East due to Israeli settlements in the West Bank, which are illegal under Israeli and international law, and the potential for increased conflict with Palestinians.
๐ Impact of Earthquake in Taiwan and Reflections on Life
The paragraph describes the impact of an earthquake in Taiwan, with a focus on a video showing boulders rolling down and hitting cars. It reflects on the potential for greater loss of life and the unpredictability of such natural disasters. The conversation then shifts to lighter topics, including the speaker's personal experiences with RuneScape and a discussion about the price of Tesla's FSD software in comparison to other automotive companies' software strategies.
๐ Tesla's Market Performance and Future Challenges
The paragraph analyzes Tesla's market performance, noting that while the broader market has rallied, Tesla's stock has declined by 177%. It discusses the potential for a market correction and the impact it could have on Tesla, particularly given its weak fundamentals. The speaker expresses a strategic consideration for investors regarding tax loss harvesting and the importance of being realistic about data and market trends. The paragraph also addresses criticisms of the speaker's changing opinions based on new data and the challenges faced by companies like Starbucks in China.
๐ Global Economic and Political Updates
This paragraph provides an overview of various global economic and political updates, including the patient with a transplanted pig kidney being discharged from the hospital, the continuation of Canada, China, and US talks, and the assertion that Democrats are losing minority voters. It also mentions Trump posting a $175 million bond in a New York fraud case with the help of a California billionaire known for subprime auto loans. The paragraph concludes with a discussion on the potential for Google to charge for AI-powered searches and rumors about Tesla scouting for an India location for a new plant.
๐ Excitement for Future Projects and Market Predictions
The paragraph expresses excitement for upcoming projects, including the launch of mini funds and the development of a fintech startup. It also provides predictions for the S&P index and discusses the potential for a long-term winner among real estate stocks like Zillow, Redfin, or Open Door. The speaker shares personal opinions on the quality of work done by Open Door and the need for lower interest rates to boost real estate agent volumes. The paragraph concludes with a discussion on the recent surge in weed stocks following Germany's push for legalization and the speaker's personal content creation plans.
๐ Warning Signs for the Market and Final Thoughts
The paragraph discusses warning signs for the market, including a potential near-term correction that could be painful for specific stocks. It highlights the importance of watching wage growth and CPI reports, and expresses concern about the overall market being on thin ice. The speaker shares personal observations about Bitcoin's struggle to stay above a certain trend line, which could be a red flag for risk assets. The paragraph ends with a disclaimer clarifying that the video's content is for informational purposes only and should not be considered personalized financial or real estate advice.
Mindmap
Keywords
๐กDeutsche Bank
๐กFree Cash Flow
๐กGross Margin
๐กEarnings Per Share (EPS)
๐กPrice-to-Earnings Ratio (P/E Ratio)
๐กMarket Correction
๐กCompetition in China
๐กFull Self-Driving (FSD)
๐กGold Rally
๐กStrategic Petroleum Reserve
๐กWage Price Spiral
Highlights
Deutsche Bank's analysis on Tesla forecasts flat volume in 2024 and limited free cash flow, which could potentially lead to the company needing to raise funds.
The discussion emphasizes the importance of Tesla's free cash flow, contrasting the views of Tesla bulls who read cash off the balance sheet without considering payables.
The presenter highlights the negative reaction to Tesla's Q1 results as a reflection of investors' increased understanding of the company's near-term challenges.
Tesla's revenue projections for Q1 have been lowered and the gross margin adjusted to 13.5%, reflecting lower volume and ongoing factory expenses without matching revenue.
The analysis projects Tesla's full year volume for 2024 to be 1.84 million vehicles, a 2% growth from the previous year, and an 8.6% price decline year-over-year.
Deutsche Bank reduces its earnings per share for 2025 to $215 and for 2024 to A180, indicating a high PE ratio even with a recovery to 20% growth.
The presenter challenges the notion that Tesla's struggles are industry-wide, citing data showing growth in sales for other major automotive companies.
Elon Musk's strategy of licensing Tesla's FSD software to other automakers is discussed, noting that despite previous claims, no takers have emerged yet.
The conversation touches on the unusual rise in gold prices, which typically rally when the 10-year real yield is low, suggesting a potential shift in market sentiment.
The presenter shares insights on the wage price spiral and its potential impact on inflation, urging viewers to watch a related video on the main channel.
Apple's exploration of developing personal robots and other innovative devices is mentioned, indicating a shift from their previous focus on an EV project.
The presenter expresses concerns about the political situation in California and the need for better alternatives.
Tesla's stock performance is analyzed, showing a significant drop in value despite the overall market rally since November 1st.
The presenter discusses the potential for Tesla to regain growth, suggesting that the company may need to bottom out before it can recover and be priced as a growth stock again.
The conversation includes a discussion on the challenges facing Tesla in China and the need for a strategic shift to regain momentum in that market.
The presenter shares his perspective on the future of robotaxis, expressing skepticism about the timeline for their widespread adoption due to unresolved issues.
The presenter talks about the ongoing fundraising efforts for his company, House Haack, and the excitement around the future of the business.
The presenter provides a general outlook on the stock market, predicting a near-term correction and advising viewers to be cautious in the current market environment.