Investor's Corner
Ex-Goldman CIO slams Tesla coverage that cited TSLAQ points on S&P 500 inclusion
After four profitable quarters, expectations are high that Tesla (NASDAQ:TSLA) will be included in the S&P 500. The electric car maker posted four profitable quarters as of Q2 2020, effectively meeting the requirements to be included in the esteemed index. Yet if a recent article on Bloomberg was any indication, there are allegedly doubts about Tesla’s eligibility to be included in the S&P 500.
Citing points from DataTrek Research, Bloomberg noted that there are doubts about whether Tesla has really qualified for the index. According to the article, doubts are likely present due to the company’s profits being tied to the sale of regulatory credits. Nicholas Colas, DataTrek’s co-founder, argued that if these credits were not counted, then Tesla would not be able to post its profitable quarters, since the money the company earns from its core business is simply too “skimpy” or “volatile.”
“This puts the S&P committee in charge of adding names to the 500 in a real bind, because while to the letter of their ‘law’ Tesla qualifies for inclusion this is purely due to regulatory arbitrage — not fundamental profitability from designing, manufacturing and selling cars,” Colas argued.
I told the reporter her article presents a fringe view of what S&P may or may not be thinking, painted by the $TSLAQ community. The view is not supported by any research. Had the Fremont plant not been shut down for 8 weeks, $tsla would have made a profit w/o reg credits.— Gary Black (@garyblack00) August 25, 2020
The points outlined in the recent Bloomberg piece were called out by former Equities Goldman Sachs Asset Mgmt CIO Gary Black, who penned a letter explaining how the article misses a number of key points behind Tesla’s profitable quarters. Black, who has also served as the CEO of Aegon Asset Mgmt US, the Co-CIO of Calamos, and the CEO/CIO of Janus Capital Group, admonished the publication for essentially parroting TSLAQ talking points. According to Black, doubts about the electric car maker’s regulatory credit earnings only represent a niche view, especially this relation to the electric car maker’s possible inclusion into the S&P 500.
“Your Tesla story and headline today is at best one-sided and at worst, irresponsible. It presents a fringe view of what S&P is likely thinking, painted by the TSLAQ short community that has been trying to get a journalist to champion this view for weeks. You could have at least offered the mainstream view of what investors are thinking, consistent with the sharp rise in the Tesla stock price over the past two weeks.
“Tesla delivered a profitable 2Q in the midst of the worst economic downturn in 70 years, even with its main factory in Fremont, CA shut down for 8 of the 13 weeks of the quarter because of COVID19. If the Fremont Factory had been allowed to stay open, Tesla would have easily turned a profit without any regulatory credits. The rest of the auto industry lost $10B in 2Q. That Tesla was able to eke out a profit despite this backdrop is likely a feat S&P will find extraordinary. To say that this issue puts the S&P in a real bind in deciding on whether Tesla should be included in the S&P 500 is unsupported by research, and is almost certainly false.”
Please see attached email I sent to the Bloomberg reporter, who is severely misinformed. $tsla $tslaq https://t.co/4DjTYEr2aU pic.twitter.com/BBpyitfhaN— Gary Black (@garyblack00) August 25, 2020
Tesla Chief Finance Officer Zachary Kirkhorn has noted that he expects revenue from regulatory credits to roughly double this year. That being said, the company is also well aware that earnings from regulatory credits will only last as long as other automakers refuse to go all-in on zero-emissions transportation. As for the S&P itself, the index has been quite silent about Tesla, with S&P Dow Jones spokesman Ray McConville declining to issue a comment on Bloomberg’s article. Tesla has also remained quite silent about the subject.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Investor's Corner
Tesla gets its latest short from Michael Burry: ‘Happy it jumped back to this level’
Tesla short seller Michael Burry, the subject of the film “The Big Short,” where he was portrayed by Steve Carell, has revealed he has opened a new bet against the stock.
In a new update to his Substack newsletter in a post titled “Trading Post June 30, 2026,” Burry revealed a new set of bets against Tesla, Caterpillar, NVIDIA, Applied Materials Inc., and the iShares Semiconductor ETF.
In regard to Tesla, Burry wrote:
“And finally I shorted Tesla at 416.22. Happy it jumped back to this level.”
This means Burry likely opened his new short position after the company’s recent rally on Wall Street, which saw Tesla shares sink in mid-May, only to recover to well over the $400 mark. Currently, shares trade at around $427.
The company saw a big Tuesday as shares climbed considerably, over 10 percent. The size of the Tesla short was not provided, nor did Burry give any information on the position’s structure, the number of shares, dollar value, or whether options were used in the short.
The Tesla and SpaceX merger everyone is talking about is quietly building
Over the years, Burry has been one of the more vocal critics of Tesla, calling its share price “media inflated,” and saying it was “ridiculously overvalued” as recently as December.
The company has largely transitioned away from being known as an automotive company and instead is much more widely regarded as an AI play, mostly due to its Full Self-Driving efforts, Optimus robot development, and data collection related to both.
This has not pulled those skeptics away from being vocal about their distaste for how Tesla is valued, but there’s no denying that the company is a global force in many things, including sustainable energy, automotive, and AI.
Wedbush Securities is initiating stock coverage on SpaceX (NASDAQ: SPCX), marking the first comments on the company since it went public several weeks ago. Wedbush and its analyst handling coverage, Dan Ives, are widely bullish on fellow Musk company Tesla (NASDAQ: TSLA).
Ives wrote his first note initiating coverage of SpaceX shares on Wednesday with a $190 price target and an ‘Outperform’ rating. The firm believes the company is well positioned off of its IPO because of its wide array of projects, including AI compute power and infrastructure, connectivity projects, and launches.
“We view SpaceX as one of the most differentiated assets within the tech market with a strong footprint across its three core markets, with Starlink driving success with connectivity,” Ives wrote, “Starship launches leading to a demand flywheel and increasing deal flow for its Colossus clusters.”
Elon Musk called it Epic: The full story of SpaceX’s Starship Flight 12
Wedbush leans heavily on Starlink, which they say is the “profitability driver given the strength of its recurring revenue base of ~12 million subscribers as of June 5th.” Ives believes Starlink is still in the “early innings” of penetrating the global telecommunications and broadband market, as it only holds less than a 1 percent share. However, this number is sure to increase over time.
It also highlights the importance of Starship, which it says is an “essential layer” of SpaceX’s overall success. SpaceX developing and displaying the ability to reuse rockets is a major cost and reliability advantage “as it reduces the necessary hardware launch costs while generating a feedback loop for future flights to improve their launch flight rate without accelerating capex spend.”
Finally, SpaceX’s recent AI/Compute projects are also very elementary, Ives writes. It is worth mentioning Wedbush said its $190 price target is derived from a valuation forecast that sees the company yielding roughly $2.48 trillion of implied enterprise value.
There are also some factors that Wedbush did not take into account with its initial coverage. The firm wrote in the note:
“We note that there is optional value coming from Starship’s accelerating scale towards sub-$200/kg unit economics, orbital data centers, and enterprise AI monetization as these factors could drive meaningful upside but these face major hurdles, so we do not take that into account with our valuation.”
SpaceX shares are down just over 2 percent today, trading at around $167 at the time of publication.
For years, there have been images and videos across social media platforms that have reminded me of when I was a 15-year-old kid teased by “Xbox 720” videos on YouTube. These videos are of the supposed “Tesla Phone” that Elon Musk was secretly developing in between leading Tesla with its electric cars and SpaceX with its reusable rockets.
Would you buy a Tesla phone ? pic.twitter.com/aaTwvvIJit
— Tesla Owners Silicon Valley (@teslaownersSV) October 6, 2023
Although Musk has put those rumors to bed several times, it was never completely out of the realm that he could get involved in cell phones in some capacity. Think outside the box and more macro-level, though. Instead of reinventing the computer, Musk reinvented connectivity by developing Starlink with SpaceX.
It could be something similar, TD Cowen analyst Gregory Williams said in a note last week, where he hinted SpaceX could be gathering some steam to acquire T-Mobile.
Williams said it would be the “clear choice” for SpaceX if it decided to go through with a network acquisition. He also suggested AT&T.
The move would be possible through selling more of its own stock, which would help SpaceX raise the money to purchase T-Mobile, which would cost roughly $300 billion. It could be one of the moves SpaceX makes post-IPO in terms of an acquisition: it already acquired Cursor AI for $60 billion.
Other analysts, like Dan Ives of Wedbush, believe SpaceX and Tesla will eventually merge into one anyway, and that conglomeration could come as soon as this year, some have said.
The implications of SpaceX purchasing T-Mobile are massive. A combined entity would create a truly ubiquitous network: T-Mobile’s terrestrial 5G towers and Starlink’s growing constellation of Direct-to-Cell satellites. This would essentially eliminate dead zones across the U.S. and potentially globally.
SpaceX would instantly become a full-scale facilities-based carrier with satellite differentiation; a huge advantage. This would pressure AT&T and Verizon heavily.
There are also concerns like a potential reduction in long-term competition, and of course, a deal of that size would face intense scrutiny from government agencies.
The strategic fit is compelling due to the existing Starlink–T-Mobile partnership and complementary technologies (space + terrestrial). It could create a dominant integrated communications player. However, the regulatory, financial, and execution hurdles are enormous — this remains highly speculative with no indication SpaceX is actively pursuing it right now.
Tesla Optimus project fires up as Musk sees production line progress
Tesla gets its latest short from Michael Burry: ‘Happy it jumped back to this level’
