Tesla Skeptic Turns Bullish
Tesla TSLA reports after the closing bell today and all investor and analyst eyes are focused on one thing.
No, not the Cybertruck (but yes, it will be all the buzz after Austin just rolled out the first factory model).
After the buzz wears off though, the focus will be on falling profit margins and whether they stabilize near 18% after successive quarters of rising costs and vehicle price cutting -- a primary driver of the Tesla sales ramp.
In the video that accompanies this article, I go over the "electric" EV sales domination of Tesla in the first half of the year with the Model Y and Model 3. I have several data graphics and analyst commentaries to share that you don't want to miss.
And I explain the math that made me turn from rational skeptic to curious investor.
Tesla Skeptic Learns Algebra (TSLA)
I start out explaining why two years ago I picked the Ford F F-150 Lightning to be a solid winner over the Cybertruck. You can review that article and video here...
The F-150 Lightning Will Crush the Tesla Cybertruck
We made over 80% on Ford shares on that thesis in my TAZR Trader portfolio last year.
But on Monday, all that changed when Ford had to capitulate and lower their prices. They said it was to pass on their cost savings to customers.
Yet with Lightning trucks sitting on dealer lots over 90 days and the Cybertruck about to go into full production -- with possibly 1.5 million "reservation" pre-orders -- Wall Street smells a bluff.
So, on Monday I sold my Ford F shares that we bought near $12... and I bought Tesla. Here was my quick rationale...
BUYING Tesla between $280 and $290. That's right, this Tesla skeptic has seen the light.
And it might mark a short-term top ahead of earnings on Wednesday, but I think the stock is headed to challenge the 52-week highs at $310-315 very soon.
I'll have more research this week on why I am suddenly a TSLA bull, but I'll quickly summarize the argument thus...
1. Massive economies of scale and vertical integration that other EV mfgs can't compete with = best and cheapest EVs
2. EV adoption accelerates as both cost-per-mile and environmental impact are winning
3. Sales of Model Y are much stronger globally than I previously understood, and Model 3's are EVERYWHERE between Chicago, Milwaukee and Madison.
4. Momentum continues to go their way with $7500 tax credit going up-front next year
5. Nothing to do with Cybertruck orders... and everything to do with them as The BRAND dominates
(end of Monday "buy rationale" for TSLA)
What I didn't talk about yet is Tesla's relentless innovation with manufacturing elements like the GigaPress, FSD (Full Self-Driving), and bringing battery manufacturing in-house with the 4680 designs.
I'll be doing that later today for a Zacks Strategy Session with our in-house team of analysts.
Until then, watch today's video even if you are finding this after Tesla has reported earnings because if the stock is lower on some disappointment in the outlook, I will give you plenty of reasons to consider buying some shares on any drop towards $250.
And for those interested in my F-150 "Crush" thesis, here was my more detailed rationale for buying Ford, of which I am still a long-term fan...
I was a big fan of the F150 Lightning roll-out in 2021 for several reasons that still stand...
1. Work-truck innovations like outlets to power tools, plus a new world of EV acceleration and power-towing.
2. Embedded software intelligence features for range calculation with varying loads and tow-hitch assist.
3. The global EV vision of CEO Jim Farley
Here's how I summed up the picture in July of 2021 in the vlog The F-150 Lightning Will Crush the Tesla Cybertruck...
The New F-150 Lightning: Pickup Truck Becomes Tech Platform
So why do I think the F-150 Lightning will clobber the Tesla Cybertruck? Because as much as the cyber thing is a luxury toy with low practical usage (or at least low visibility in terms of recognized practicality), the F-150 Lightning is the complete opposite.
In the tradition of the world's top selling vehicle, it's a workhorse that just got a huge upgrade of technology, features, and connected intelligence.
We're talking about 10,000-pound max towing capacity, 775 pound-feet of torque, up to 300 miles of range, zero-to-60 in 4.5 seconds, onboard electric power for your work tools and adventure toys with 11 outlets, 9.6kW of backup to "off-board" and power your house up to 3 days, and fully-connected vehicle intelligence for range, load, and charging calculations as well as mobile software updates.
And the cab has the beautiful control touchscreen like the Mustang Mach-E -- plus options to lower the gear selector lever and roll-out a big laptop workspace from the elbow rest! I've got a big fat 2015 Chevy Suburban that has no room for me to do anything near that (you're starting to see how I love this truck). Did I mention the FordPass Charging network and app?
Obviously the features and $40,000 base-price increase as one ascends into the Ford Pro levels, designed specifically with trade contractors and commercial fleets in mind.
I think that the primary customers of F-150s are going to find these upgrades especially attractive. Those primary, and tough, customers are contractors and other business owners who need a reliable, stylish workhorse every day of the week. Once this group adopts the benefits of a familiar truck turned EV, they are going to be very influential on those around them.
(end of excerpt from my July '21 vlog)
Bottom line: I want both Tesla and Ford to win and I think they both will dominate, in their own ways, this decade.
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