watch before tesla earnings...

today is obviously Tesla earnings a day

and I'd actually like to start with a

mention of something very interesting

about Tesla but a lot of people are

putting up earnings estimates and we'll

look at a few of these what I think is

most fascinating though is actually

positioning positioning is probably the

most important as well so there's a

piece here by Bank of America's

Securities and it talks briefly about a

Tesla positioning they start off by

talking about is you know taking a

bubble and you know how high will Tech

basically go in the gist of their piece

on big tack before we talk about Tesla

is really just that yes the S P 500

excluding those top seven companies in

the S P 500 is valued at just 15 times

earnings but time but if you factor in

those top seven you know those top seven

that are trading for 40 times earnings

then the entire s p or you know

valuation goes up to about 18 19. point

is is that a bubble right are these

Ultra techs a bubble and the argument by

Bank of America Securities ends up that

well it's really these these Mega Caps

or Ultra caps at this point that are

just deemed the safest to be in but not

only the safest but they're deemed to be

those with the most amount of cash and

the most amount of profit potential so

maybe this is more of a case of the rich

get richer than it is a case of some

kind of a bubble bursting now what is

wild about that is actually the very

last page of this take a look at this

just apple and Tesla are underweight out

of the seven so in other words These

funds uh larger investment funds or

whatever that have moved into these Mega

cap stocks so heavily this year so far

are mostly allocated or overweight to

Microsoft Amazon Google Nvidia uh the

the other voting cost shares of Google

and Facebook but they're actually

underweight apple and Tesla now that I

think is very interesting because this

could lead to floors under and this is

my thesis but could lead to floors under

pricing for apple and Tesla in other

words weak earnings at Apple and Tesla

could be seen as a short-term

opportunity to get back to overweight in

these two stocks to catch up to the

Investments being made into the

Microsoft Amazon Google Nvidia and

Facebook

that's a thesis that I have we're not

necessarily always going to be able to

say that all you know bad earnings is

always going to get caught up with a

with dip buying but it does seem to be

that there's a lot of money on the

sidelines whether it's from fund

managers or individual retail looking

for an opportunity to buy the dip

usually Tesla earnings lead Tesla stock

to go negative and I do think it's very

interesting that on the morning of Tesla

earnings you have Tesla actually trading

up about point seven percent in

pre-market trading especially since the

usually Tesla goes negative uh after

earnings so pay attention to that but

this this underweight positioning uh by

institutions of Tesla and apple could be

a good Tailwind a for Tesla an apple I'm

all honestly surprised that Apple was

somewhat underweight as well relative to

some of these others here but uh

oh well and and it's also worth noting

the number of funds not just the

positioning of underweight versus

overweight but also the actual

positioning if you do own Apple uh or

rather I should say not not relative to

the uh being underweight overweight let

me rephrase that

uh somewhere still around 70 percent of

funds do have exposure to Apple but it's

a nominal exposure so that's what's

worth noting is the level of exposure

for Apple is is high like a lot of

people have a little bit of Apple but

it's underweight compared to even the S

P 500 as you can see apple positioning

is only sitting at about 0.6 whereas the

S P 500 would put you at a substantially

higher positioning uh and funds actually

have a higher positioning to Microsoft

Amazon Google Nvidia meta than they do

to the S P 500 but only about somewhere

with 32-ish 35-ish percent of funds

actually have exposure to Tesla it's all

alone over there in that corner wild now

regarding some estimates I'd love to see

uh the um you know Troy's estimates on

Twitter I think he does a great job uh

his estimates here versus consensus are

that we're looking for an 80 cent uh

non-gaap EPS I personally don't love

using non-gaap let me just quickly

remind you what non-gaap is non-gap is

and every company is different with this

so I'm painting with a big brush here

but non-gap is basically a beautiful way

to say Hey you know stock based comp is

a non-cash expense so we're going to

pretend like we didn't spend any stock

based compensation money so if we say we

spent 200 million dollars on stock base

comp we're just going to come up with

this new figure called non-gaap EPS that

won't be associated with our stock based

camp and evaluate based on that which I

think clearly understates your

compensation expenses this is why

usually your Gap EPS is lower so to be

exact the adjusted or non-gaap EPS for

Tesla is expected to be

80.9 percent to be perfect they Tesla

has beat on that number five out of

eight of the last earnings

for EPS gaap we're looking for 71.1

cents they've beaten on that number six

out of eight times

on Revenue Tesla has beat five out of

eight times we're looking for 24.5

billion and on net income they've beaten

seven out of eight times which is good

that you have this history of beating

sort of on a margin POV and we're

looking for

2.87 billion so I would write those

numbers down I also think it's

interesting that the average movement

for Tesla stock is 7.14 but the implied

movement over the next 24 hours is only

6.48 which is lower than what you would

have expected

so let's go back for a moment to uh

Troy's calc so we got some uh more

detail here on the Wall Street consensus

his thinking is that wall Street's

margin estimate is going to be 18.2 he

thinks they're actually going to come in

with a 17.3 I do think the big two risks

for Tesla are not only are you getting

this uh this margin Miss from Wall

Street expectations because that

unfortunately that a margin Miss is

going to lead to Future write Downs of

earnings not great uh we but that could

be offset by what's said in the earnings

call so it's always possible that you

know the first minute you get some kind

of large sell-off

and then maybe that gets talked up again

in the earnings call though and I don't

know usually I'm not so you know knock

on wood optimistic about uh uh post

earnings but you know I I've never

really found Tesla or trading earnings

to be super beneficial since you know

sometimes you end up getting to a

three-week rally soon after you get

earnings and then all of a sudden you

miss out because you're like ah crap I

forgot to buy back in trading earnings

is really difficult so I'm I'm not I'm

not selling uh so what else do we have

we've got uh Nissan announce the test uh

they're adopting the Tesla charging uh

adapter as well you've got a little bit

of news that Tesla is converting a movie

theater I think it was in LA into some

kind of delivery and Service Center Hub

which is great because you know the more

uh service centers we've got available

the easier it is for new customers to

get their problems dealt with personally

I haven't had a lot of problems with

Teslas lately but I will say when I

first got my Tesla back in 2017 there

were a lot of problems and having more

service centers around is nice

especially when you have the mobile

service centers some areas just don't

have mobile service availability so the

more they can expand that service the

more people can say nice and positive

things about Tesla so overall look

whatever happens today for Tesla

earnings obviously it's going to be very

closely watched I'll be covering it live

so make sure you're there but this

underweight right here by funds for

Tesla could flip and this is where I

actually like to go most optimistic uh

and and I realize it's probably a little

based but I want to put it this way I

think that once Tesla I'm going to write

this down because I I didn't want it to

be forgotten once Tesla proves

it can survive this recession which I

know most of us who invest in Tesla are

looking at saying what do you mean Kevin

of course they're going to survive this

recession yes

we know that but once Tesla proves to

the rest of these these underweight

funds so I'm going to write this to the

underweight funds that not only can It

survive this recession but also

still generate uh incredible above

industry average margins and Beyond

because really industry margins suck

industry anyway right margins suck

anyway though I like to say that that

industry margins suck anyway I mean GM

GM is decent except for their EV

business they lose money on EVS they

don't expect to make money on electric

vehicles until like 2025. but for their

legacy Biz uh they're somewhere around

13 gross profit and uh you know the Ford

is a little less than that uh but but

still still decent excluding electric

vehicles they don't expect to make money

on electric vehicles until

26 so something stupid like that but

anywho uh once I believe that Tesla

proves look we're gonna get through the

hard time

we're gonna get through the potential

you know so we're gonna we're gonna

survive the capital needs right this is

uh stock uh this is basically a money

raise

uh and survive the margin or or I should

say hit the margin trough hit margin

trough which is hitting the floor right

and then we start moving up again and

move up again this is really when I

think you're going to start getting

those underweight funds actually moving

into Tesla so a lot of people have been

wondering like hey when would I really

in Earnest be interested in you know not

just like from a rebalance point of view

but cutting Tesla and selling Tesla and

moving into whether it's real estate or

something else well it's really when

funds get euphoric

that's that's when trim time comes and

we're nowhere close to that so I know

the stock is obviously moved from you

know 105 or whatever to 290s

but really that just puts you back to

where you were and like

you know March of last year so you

really haven't done anything if you look

at it from a year over year point of

view uh so so Euphoria wasn't there then

it is in here now uh and in my opinion

that actually gives you a flaw for bad

news as much as there could be a little

rubber band to the downside but it gives

you a really optimistic path forward

that's what my take uh now uh we'll see

we'll see what has been happening uh

Tesla should just acquire end face you

know they they probably wouldn't do that

mostly because they create their own

inverters and they use string inverters

which or a cheaper way of conducting uh

solar installs

uh well the micro inverter people say

that so that's a little biased so uh but

uh it's very unlikely that uh that you

would see that when they've you know

they acquired Solar City right so you're

acquiring the string inverter uh

Strat

which is okay at what point is Tesla

overpriced you know well that's going to

depend on where that trough and margin

is

and where the trajectory is of where it

ends up going so you know if Tesla caps

out at a 20 margin you know maybe

euphoric is 350 375. if Tesla goes back

to its 30 margin Direction maybe u4 is

more like five six hundred dollars who

knows that could even be much higher

than that uh so we'll have to see anyway

some thoughts on Tesla so buckle up

today but this underweight positioning

something I haven't seen talked about

and makes me very excited so we'll see

because the more you get institutions

transitioning the more you actually get

uh a positive analyst pieces written as

well as opposed to all the bare pieces

that get written about FSD and all that

nonsense but you really have to drive

FST to understand it somebody has

negative comments about FSD and they

haven't actually tried it

probably uh not not the best uh resource

to consider uh opinions from anywho as

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