Tesla Inc. TSLA has been on an uninterrupted rally since June 25, gaining 35% in just seven sessions. Despite this, the recent surge has not evinced confidence in a fund manager who substantially trimmed his Tesla position in early 2024 amid the electric vehicle maker’s fundamental woes.
What Happened: Bombarded with questions from social media users, Future Fund Managing Partner Gary Black was forced to respond as to when would be the right time for the firm to restock Tesla shares. The stock now has a 3.6% weighting in Future Fund Active ETF FFND, the actively-traded flagship exchange-traded fund of the Black-led firm.
“We don’t trade. And we don't blindly change our position size….. just because the stock price is up,” Black said. Delving into his firm’s strategy, the fund manager said the team constantly evaluates position sizes based on its assessment of upside/downside.
Black noted that Tesla’s 2024 and 2025 forward estimates have declined by 49% and 44%, respectively, over the past 12 months. It’s hard for “disciplined” portfolio managers to add to Tesla positions until the earnings trajectory reverses, he said.
That said, the fund manager thinks things could be starting to reverse but is not yet ready to dive back into the stock. “We'd wait until after 2Q earnings to draw any conclusions. We'd like to see more evidence of pricing discipline,” he said.
See Also: How To Buy Tesla Stock
Why It’s Important: Last week, Tesla reported second-quarter deliveries that came in ahead of muted expectations. Despite deliveries declining year-over-year for a second straight quarter, the outperformance relative to expectations led to buoyancy in the stock.
Cautious analysts point out that the sales beat may have been achieved on the back of the copious financing incentives the company facilitated for buyers.
The second-quarter earnings report, due July 23, will offer more cues on the margin trajectory. The management could shed more light on the progress with the company’s full self-driving software or FSD, which is currently sold as a “Supervised” version. Investors may be particularly interested in the take rate of FSD as the technology is a source of high-margin recurring revenue.
Updates on upcoming models, including the low-end EV, could also evince some interest.
The Aug. 8 robotaxi unveil event could be another stock-moving catalyst depending on what Elon Musk and team have got to say.
Price Action: Tesla stock, which currently trades at the highest level since Jan. 2 (both on an intraday and closing basis), ended Wednesday’s session up 6.54% at $246.39, according to Benzinga Pro data.
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