Future Fund Managing Partner Gary Black took to Twitter on Sunday to condemn “disillusioned” Tesla Inc TSLA enthusiasts who labeled him a “short-term speculative trader” for trimming his position in the EV company.
What Happened: In his post, Black stated that he aims to provide “realistic commentary” on Tesla’s volumes, earnings, and valuation. “I enjoy healthy, spirited debates backed by facts and figures. But when you resort to name-calling or personal attacks (e.g., you're a short-term speculative trader; nothing could be further from the truth), I draw the line,” Black wrote.
He clarified that he is a long-term investor and recently trimmed his Tesla position due to a 50% loss in the company’s long-term earnings power over the past 12 months. “With TSLA auto revenue growth going negative and management blaming it on high-interest rates, we lost confidence TSLA management would do anything to change the negative revenue and earnings trajectory,” he added.
Black currently maintains a price target of $250 for Tesla, significantly higher than the $163.57 the stock closed at on Friday. “We still own $TSLA at a 3% weight. Our investment process involves continuously quantifying upside/downside and sizing positions based on those upside/downside opportunities,” he explained, emphasizing that he holds a long position and overweight rating on the stock.
“Valuation is based on forecasts, not hype,” he said. “Without analysis, one is selling hype. We don't hype.”
Ross Gerber, the president and CEO of Gerber Kawasaki Wealth and Investment Management and a Tesla investor, concurred with Black’s sentiments. Gerber, too, has faced criticism on Twitter for his comments on Tesla CEO Elon Musk and the company’s performance.
Gerber views the current Tesla stock slump as indicative of a more “reasonable” valuation, attributing it to the company’s falling earnings and failure to deliver on promises, including autonomous driving.
Why It Matters: In February, Black admitted to being massively wrong in not anticipating that Tesla would initiate a price war, leading to its earnings power collapsing for 2024 and 2025. He has been vocal about his criticism of price cuts as a means to drive volume, advocating for advertising instead.
In November, Black also addressed Tesla fans attributing the stock's weakness to an EV bubble popping, suggesting it could partly be due to Musk's purchase of social-media platform Twitter.
Price Action: Tesla shares closed 0.66% higher on Friday at $163.57. However, the stock has dipped 34.16% year-to-date, according to Benzinga Pro.
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