Future Fund Managing Partner Gary Black suggested on Monday that EV giant Tesla Inc TSLA should consider adding a fourth segment focused on its Artificial Intelligence endeavors to its earnings reports.
What Happened: Currently, Tesla’s earnings reports consist of three segments: automotive, energy, and services. By introducing AI as a fourth segment, the company could potentially attract greater investor attention to its full-self-driving (FSD) project and other AI initiatives, such as FSD licensing, robotaxis, Optimus, and Dojo, Black explained.
According to Black, the addition of a fourth segment would allow investors to measure, track, and analyze Tesla’s AI ventures more effectively, thereby potentially enhancing Tesla’s valuation. In his post, the analyst and Tesla bull also tagged Tesla’s VP of Investor Relations, Martin Viecha.
“Today, we estimate FSD is only $1B revs (out of $100B total revs) so likely not significant enough. But a segment that includes FSD, FSD licensing, robotaxi, Optimus, and Dojo would get a high P/E and could be measured and tracked by investors, which would be additive to TSLA's valuation,” he posted.
Impending Price Hike A ‘Win-Win’ For Tesla: In addition to proposing the AI segment idea, Black addressed recent speculation about the reasons behind Tesla’s stock price increase. He refuted the notion that the rise was solely due to the positive reception of its new version of FSD, stating that stock prices are primarily influenced by increased earnings and cash flow.
Black suggested that Tesla’s announcement of impending price hikes in the U.S. and European markets over the weekend was a significant factor in the stock’s rise.
Tesla revealed plans to raise the price of its best-selling Model Y SUV by about 2000 euros (approximately $2173) in several European countries on March 22nd. Additionally, starting April 1, the starting price for all Model Y variants in the U.S. will increase by $1000.
Why It Matters: While Elon Musk has previously characterized Tesla as an “AI/Robotics company” rather than solely a car manufacturer, the company does not currently break down its AI revenues or profits separately in its financial reports.
Black, who has criticized Tesla’s strategy of frequent price cuts to stimulate sales, views the announcements of impending price hikes as a positive development.
He believes that these warnings could potentially increase delivery volume for the first quarter, allowing Tesla to improve its earnings and auto gross margins. Over the past year, Tesla’s profit margins have suffered due to constant price reductions.
Despite being a long-term Tesla investor, Black recently reduced his Tesla holdings due to a decline in the company's long-term earnings power over the past 12 months. The flagship fund of Future Fund, The Future Fund Active ETF FFND, currently holds 1,916 Tesla shares valued at approximately $333,000, making it the 15th largest holding in FFND, down from its previous fourth position.
Check out more of Benzinga's Future Of Mobility coverage by following this link.
Photo via Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
