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☕ Tesla: Awful my asteroids!

Jan 30, 2025

Good morning! 👋

All three indices are in the green as I type.

Rock solid earnings have a funny way of doing that, never mind what the headline mongers are trying to cook up to convince you otherwise. 🤦‍️

Always remember…

Volatility is the price of admission for serious investors and traders.

Here's my playbook.

1 – Like that’s a surprise, Fed does nothing

Fed Chair Jerome “JPow” Powell stated yesterday that there is no rush to cut rates until inflation and jobs data warrant a change. Then, kept rates at 4.25% - 4.50%. (Read)

Can we move on now??!!!

Keith’s Investing Tip: Rates are for traders, profits are for investors. It’s okay to be one or the other… just know which is which and who you are. Consistent profits get a whole lot easier when you understand who’s looking back at you in the mirror.

2 – Tesla: Awful my asteroids!

Tesla reported Q4 earnings. (Read)

The analysts and clickbait artists are already rushing to publish headlines insisting that the results are ‘disappointing’ and ‘awful’.

I’m not sure we’re looking at the same company.

I have told investors and anybody who would listen that Tesla would be about waaaay more than cars practically since the day it went public on June 29, 2010. Further, that it was important to invest based on the bigger picture not myopic 90-day earnings expectations cooked up by a bunch of analysts who have never worked at Tesla, who are not experts in the many industries within which Tesla operates and who couldn’t keep up with Musk if they tried.

Since then, I have endured no end of scoffing, not to mention a lot of finger-wagging, down their nose looking nastiness from the “smartest people in the room” blathering on about inventory, deliveries, and my personal fave, valuations.

That’s okay, though.

Tesla stock has returned approximately 25,000% since going public, enough to turn every $1,000 invested on June 29, 2010, into about $251,000 today. The S&P 500, by comparison, has returned approximately 493% over the same time frame, turning the same $1,000 into about $5,930 today.

I am not telling you this to brag because a) that’s not my style and b) I could have easily been wrong. Besides, it comes with the territory given what I do for a living.

The point I want to make is that your job as an investor is to identify major themes and the companies driving ‘em as early as possible. Then, get your money there first.

History suggests there are 10-15 “Teslas” out there right now and I hope you’re on the hunt!

If you’re tempted to fall for the same tire old schlock from Wall Street’s analysts, take a good hard look at this chart. The bottom 3 categories and their CAGRs, in particular.

Wait till autonomous driving, robotics and AI enter into the picture!

Tesla’s just getting warmed up, imho.

Keith’s Investing Tip: People often tell me they don’t like Tesla because they don’t like Musk. There’s nothing wrong with that whatsoever. Some people don’t like McDonald’s stock because they think the food is unhealthy. Or booze stocks because they don’t drink. I don’t like Meta because I think Zuckerberg lacks a moral compass. Just make peace with it and move on. Understand, however, that plenty of people are capable of looking past the issues holding you (or me) back and, in some cases, laughing all the way to the bank. And that there is nothing wrong with that either. 😀

Btw, I like to think we’re pretty good at this stuff because that’s what people who’ve been reading along for many years tell me. If you’d find my perspective helpful, I’ll be here.

3 – Microsoft reports a double beat

Microsoft reported earnings, beating both EPS and revenue expectations. (Read)

Revenue was $69.6 billion, +12% YoY
Operating income was $31.7 billion, +17% YoY
Net income was $24.1 billion, +10% YoY

Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year." – CEO Satya Nadella

Yep.

You know what to do. 😀

4 – What does Zucko know?

Team Zuck reported solid Q4 earnings but forecast both slowing revenue and faster expense growth at the same time. (Read)

Revenue: $48.39 billion, representing a 21% year-over-year increase. 
Operating Income: $20.72 billion, a 15% increase from the same period last year.
Net Income: $14.02 billion, up 201% year-over-year

El Zucko may be a lot of things, but stupid isn’t one of ‘em.

I find the fact that Meta declined to issue a full year revenue forecast interesting, saying instead that, “We expect the investments we are making in our core business this year will give us an opportunity to continue delivering strong revenue growth throughout 2025.”

To my point a moment ago, I may just have to toss in on a few shares even though it means making peace with my perception of Zuck. I think Meta’s return to scale could jump exponentially.

Seems to me that the $60B he plans to spend on AI wouldn’t be on the table if he hadn’t figured out a way to 10X that or at least make investors think he has. 🤔

Hmmm.

5 – No survivors, no answers, no AI

I’ve flown into DC many times, often right down the same landing pattern where an American Airlines Jet collided with a UH-60 Black Hawk helicopter operating out of Davison Army Airfield this morning.

It’s a busy airspace.

My heart sank when I saw the news because I can distinctly remember seeing other aircraft nearby many times as our plane landed.

We won’t know what went wrong until the investigation is complete so there’s no use speculating. But it does seem to me that AI would be a primary and immediate upgrade.

Air traffic controllers have one of the most intense, high-pressure and zero margin for error jobs in the world. Aviators, too.

In this case, I suspect that AI could have helped with predictive analytics and traffic optimization but also helped identify potential conflicts between aircraft by anticipating near miss scenarios and suggesting corrective actions faster than human reaction times.

Today’s incident could, unfortunately, come down to human error as simple as not having a transponder on or common radio frequencies that would have allowed controllers and pilots to communicate with each other.

Thoughts and prayers to everyone and their families. 🙏