Evening Stock Market & Crypto Livestream 4-3-2024

Meet Kevin Market Live
3 Apr 202444:05

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

  • ๐Ÿ“‰ Deutsche Bank expects flat volume for Tesla in 2024 and limited free cash flow, which could be a potential risk factor.
  • ๐Ÿ’ฐ Tesla's Q1 revenue projections were lowered and gross margin adjusted to 13.5%, reflecting lower volume and ongoing factory expenses without matching revenue.
  • ๐Ÿš— The full-year volume for Tesla in 2024 is predicted to be 1.84 million vehicles, indicating only about 2% growth.
  • ๐Ÿ“‰ Tesla's 2025 earnings per share (EPS) are lowered to $215, leading to a high PE ratio even with a recovery to 20% growth.
  • ๐Ÿ”‹ Discussion of other electric vehicle manufacturers' sales performance in Q1, showing that Tesla's challenges do not appear to be industry-wide.
  • ๐Ÿ’ก 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.
  • ๐Ÿ“Š 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.
  • ๐Ÿ›๏ธ Trump's legal battles involve financial agreements with restrictive terms, highlighting the complexities of high-profile business arrangements.
  • ๐Ÿค– Apple is exploring the development of personal robots and other devices, showing their continued interest in expanding into new technology areas.
  • ๐Ÿ—ณ๏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

00:00

๐Ÿ“‰ 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.

05:00

๐Ÿ“ˆ 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.

10:01

๐Ÿค 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.

15:04

๐Ÿ›๏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.

20:05

๐ŸŒ‹ 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.

25:05

๐Ÿ“‰ 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.

30:06

๐ŸŒ 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.

35:08

๐Ÿš€ 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.

40:09

๐Ÿ“‰ 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

2024 Volume Expectations
Free Cash Flow
Q1 Revenue Projections
2024 Full Year Volume
2025 Earnings Per Share
Financial Projections
Tesla's Market Position
Competition in China
Industry Comparison
Licensing FSD Software
Market and Competition
Investor Reaction
Stock Price Movements
Price Target Adjustments
Investor Sentiment and Stock Performance
Gold and Inflation
Oil Prices
Trump's Legal Issues
Wage Price Spiral
Broader Market and Economic Factors
Apple's Shift to Robotics
Political Updates
Middle East Tensions
Natural Disasters
Other Developments
Deutsche Bank's Analysis on Tesla
Alert

Keywords

๐Ÿ’กDeutsche Bank

Deutsche Bank is a prominent global financial institution often sought for analysis and opinions on market trends and financial health of major companies. In the context of the video, Deutsche Bank's analysis of Tesla's financial outlook is a central theme, highlighting expectations of flat volume in 2024 and limited free cash flow, which are critical factors for investors to consider when evaluating Tesla's stock.

๐Ÿ’กFree Cash Flow

Free cash flow refers to the cash a company generates after accounting for cash outflows to support operations and capital expenditures. It is a key indicator of a company's financial health and its ability to generate wealth for shareholders. In the video, the presenter emphasizes the importance of Tesla's free cash flow, noting that negative free cash flow could signal financial distress and potentially lead to the need for capital raising.

๐Ÿ’กGross Margin

Gross margin is a financial metric that indicates the percentage of total sales revenue that a company retains after incurring the costs associated with producing or delivering its goods or services. A lower gross margin can signal efficiency issues or pricing pressures. In the video, the discussion around Tesla's gross margin being reduced to 13.5% reflects concerns about the company's profitability and cost management.

๐Ÿ’กEarnings Per Share (EPS)

Earnings Per Share (EPS) is a measure of a company's profitability, calculated by dividing the net earnings by the number of outstanding shares. It indicates the portion of a company's profit allocated to each share of common stock. Lower EPS forecasts, as mentioned in the video, can be a red flag for investors as it suggests the company's profitability is declining.

๐Ÿ’กPrice-to-Earnings Ratio (P/E Ratio)

The Price-to-Earnings Ratio (P/E Ratio) is a valuation ratio of a company's current share price compared to its per-share earnings. It is used to determine if a stock is overvalued or undervalued. A high P/E ratio suggests that investors are expecting higher future growth. In the video, the presenter discusses Tesla's P/E ratio of about 94 times based on the lowered EPS estimates, which raises concerns about the stock's valuation.

๐Ÿ’กMarket Correction

A market correction refers to a decline in the market price of assets such as stocks, bonds, or commodities, typically by at least 10% from their recent peak. It is a natural market phenomenon that occurs when asset prices are considered overvalued and need to be adjusted. In the video, the presenter expresses concern that Tesla's financial challenges might coincide with a broader market correction, which could exacerbate the stock's decline.

๐Ÿ’กCompetition in China

Competition in China refers to the increasing number of companies, particularly in the automotive sector, that are vying for market share in the world's largest automotive market. For Tesla, this means facing new and existing competitors who may offer similar electric vehicles at competitive prices or with unique selling points. The video touches on the challenges Tesla might face due to increased competition, especially with the introduction of new vehicle models by Chinese automakers.

๐Ÿ’กFull Self-Driving (FSD)

Full Self-Driving (FSD) is an autonomous driving technology being developed by Tesla that aims to enable vehicles to operate without any input from a driver. The successful implementation of FSD is a key factor for Tesla's future growth and competitive edge. However, the video highlights that proving the efficacy of FSD is crucial for Tesla to achieve a meaningful upgrade in its earnings and overcome current challenges.

๐Ÿ’กGold Rally

A gold rally refers to a significant increase in the price of gold, often driven by market uncertainties or shifts in economic sentiment. Gold is traditionally seen as a safe-haven asset during times of economic or geopolitical instability. In the video, the presenter finds it unusual that gold is rallying despite a higher real yield, which typically would not support such a rally, suggesting that there may be underlying concerns in the market.

๐Ÿ’กStrategic Petroleum Reserve

The Strategic Petroleum Reserve (SPR) is a stockpile of petroleum maintained by the United States government to store large quantities of crude oil for use in an emergency. The SPR is meant to ensure energy security and stability during times of crisis. In the video, the presenter mentions that the SPR is down to just 17 days of supply, which could have implications for energy security and the oil market.

๐Ÿ’กWage Price Spiral

A wage price spiral refers to a situation where increasing wages lead to higher prices for goods and services, which in turn leads to further wage demands to keep up with the cost of living. This cycle can potentially lead to sustained inflation. In the video, the presenter expresses concern about the possibility of a wage price spiral due to rising wages in the fast-food industry and its potential impact on the broader economy.

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.