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.
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
Investor's Corner
Tesla wins $508 price target from Stifel as Robotaxi rollout gains speed
The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Tesla received another round of bullish analyst updates this week, led by Stifel, raising its price target to $508 from $483 while reaffirming a “Buy” rating. The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Robotaxi rollout, FSD updates, and new affordable cars
Stifel expects Tesla’s robotaxi fleet to expand into 8–10 major metropolitan areas by the end of 2025, including Austin, where early deployments without safety drivers are targeted before year-end. Additional markets under evaluation include Nevada, Florida, and Arizona, as noted in an Investing.com report. The firm also highlighted strong early performance for FSD Version 14, with upcoming releases adding new “reasoning capabilities” designed to improve complex decision-making using full 360-degree vision.
Tesla has also taken steps to offset the loss of U.S. EV tax credits by launching the Model Y Standard and Model 3 Standard at $39,990 and $36,990, Stifel noted. Both vehicles deliver more than 300 miles of range and are positioned to sustain demand despite shifting incentives. Stifel raised its EBITDA forecasts to $14.9 billion for 2025 and $19.5 billion for 2026, assigning partial valuation weightings to Tesla’s FSD, robotaxi, and Optimus initiatives.
TD Cowen also places an optimistic price target
TD Cowen reiterated its Buy rating with a $509 price target after a research tour of Giga Texas, citing production scale and operational execution as key strengths. The firm posted its optimistic price target following a recent Mobility Bus tour in Austin. The tour included a visit to Giga Texas, which offered fresh insights into the company’s operations and prospects.
Additional analyst movements include Truist Securities maintaining its Hold rating following shareholder approval of Elon Musk’s compensation plan, viewing the vote as reducing leadership uncertainty.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
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