Altimeter Capital founder and CEO Brad Gerstner decided to buy Tesla Inc TSLA stock after having a “ChatGPT moment” with the electric vehicle company’s latest full self-driving release.
What To Know: Wednesday on CNBC’s “Fast Money Halftime Report,” Gerstner emphasized that when everyone else is negative about a stock, he gets excited.
“Particularly when run by a founder who’s as extraordinary a product leader as Elon Musk,” Gerstner said.
Tesla shares have faced significant selling pressure in recent months as the broader EV industry grapples with weakening demand. Slowing demand trends spurred a pricing war with competitors, which negatively impacted margins. Tesla stock is down about 27.5% since the start of the year.
The biggest thing that Gerstner believes people are overlooking, however, is Tesla’s version 12 launch of its Full Self-Driving Beta system, which he referred to as a “ChatGPT moment” for the EV maker.
“Why is that? Because they totally scrapped their prior deterministic models and have moved to an imitation learning model that really, for the first time — unlike Waymo, which is still a deterministic model — feels like a human driving the car,” Gerstner said.
“So I think they are making massive progress at an accelerating rate on FSD 12.”
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Tesla is currently rolling out version 12 of its Full Self-Driving Beta system. Gerstner noted that the EV maker is offering a free one-month subscription to the service for U.S. customers.
New reports from this week also revealed that Musk told employees to install and activate the Full Self-Driving software on all new vehicles being delivered in North America. He also made test drives a “hard requirement” in an attempt to get people to recognize how far the technology has come.
If even just a small percentage of the people who are testing Full Self Driving 12 decide to pay $200 a month for the subscription, all of a sudden Tesla begins to look like a services play, Gerstner said.
He compared Tesla’s services opportunity to Apple Inc AAPL in 2015 and 2016 when the iPhone maker transitioned to being more of a services business. The opportunity in front of Tesla is one that others can’t easily copy, he added.
“He’s got 5 million robot cars on the road collecting data that’s training this imitation model that makes it demonstrably better and almost impossible for all the traditional OEMs to replicate,” Gerstner said.
Risks to Gerstner’s thesis include soft sales out of China. He also noted that Tesla could miss delivery numbers for March when it reports monthly figures next week, so “this is not for the faint of heart,” he said. Those who are interested in investing in Tesla right now have to be willing to buy more on weakness, he added.
“But betting on Elon Musk, particularly in the age of AI, where he is building market-leading AI and market-leading models around these cars, I think is a bit of a no-brainer,” Gerstner said.
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TSLA Price Action: Tesla shares were up 1.27% at $179.92 at the time of writing, according to Benzinga Pro.
Photo: courtesy of Tesla.
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