Future Fund LLC Managing Partner Gary Black has criticized Tesla Inc. TSLA for its second-quarter earnings, citing a lack of analytical rigor and a clear strategy.
What Happened: Black, a prominent Tesla analyst, took to social media platform X, formerly Twitter, to express his concerns about the electric vehicle maker’s recent earnings. He highlighted the absence of analytical support for the company’s market cap projections and called for a clearer strategy on margin stabilization, marketing, and the rollout of Full Self-Driving features.
“When everyone is screaming buy, I try to stay measured. When everyone is selling, like yesterday, I try to offer reasons to buy,” Black wrote.
Black emphasized that it is the management’s responsibility to communicate these strategies during earnings calls and that analytical rigor was lacking in the recent call. He said, “Management's job on earnings calls is to communicate and there needs to be analytical rigor to support what is presented. Both were missing on Tuesday's call.”
He dismissed claims that investors do not understand Tesla’s business or strategy, stating that such excuses let management off the hook.
Why It Matters: The criticism from Black comes at a time when Tesla’s financial performance and strategic direction are under intense scrutiny. Recently, Tesla’s stock valuation was questioned, with some analysts labeling it as a “bubble-fraud” and suggesting it could be worth around $8.40 per share.
This sentiment was fueled by Tesla’s reliance on one-time Zero Emission Vehicle (ZEV) credits for profits.
Moreover, the company’s second-quarter earnings report revealed a significant miss in earnings per share, leading to a sharp decline in stock price. Despite this, notable investors like Cathie Wood of Ark Invest have continued to buy Tesla shares, showing confidence in the company’s long-term potential.
Additionally, Jim Cramer of CNBC defended Tesla and its CEO, calling Musk “bankable” and visionary. Cramer suggested that the recent stock decline was more about market rotation than Tesla’s fundamentals.
Furthermore, Black previously pointed out that Tesla’s weak performance under the Biden administration was due to the company’s strategic missteps, including price cuts that did not boost volume. However, he acknowledged that Tesla benefited from the $7,500 federal EV tax credit, which helped mitigate some of the financial challenges.
Price Action: Tesla’s stock closed at $215.99 on Wednesday, down 12.33% for the day. In pre-market trading, the stock further declined 1.64%. Year-to-date, Tesla’s stock has fallen 13.05%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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