EV competitors like Ford, GM are ‘scared’ of Tesla: Investor
Tesla (TSLA) shareholders approved CEO Elon Musk’s controversial $56 billion compensation package, as well as other measures at Thursday’s shareholder meeting. Financial analyst and YouTuber “Meet Kevin” Kevin Paffrath joins Market Domination to discuss the shareholder meeting and the future of the EV company under Musk’s leadership.
“The shareholder vote now behind us is great news. It’s a big negative catalyst away for Tesla,” Paffrath explains. He says that Musk’s vision of full self-driving (FSD) is “probably going to be a lot safer for the entire world,” as “we [go] toward an autonomous future.” However, Paffrath doubts whether it will happen as quickly as Musk suggests.
Regardless, Paffrath says he’s bullish on the stock in the next two to four years as the company “still has probably the best moat in full self-driving that exists.” Paffrath’s Pricing Power ETF (PP) holds just 36,000 Tesla shares in its portfolio.
Paffrath was in favor of Musk’s pay package, stating, “the deal was made in 2018 and it was very public… Frankly, if that same deal was made today at those prices then, everybody would look at that as a shareholder and go — well, at least 70% like we had then — ‘Of course, we’re going to support if you can move the market capitalization of this stock essentially exponentially. Of course, we’re going to support paying for you.’ So receiving that and then being frustrated about Elon in the short term, I don’t think is fair. I think it hits on an element of justice.”
He adds that after the company started offering consumers a lower monthly payment, he expects Tesla shares to skyrocket and “form a bottom here in delivery numbers.”
“So really, what Elon’s doing here is he’s creating a bottoming process in the actual manufacturing of electric vehicles. At the same time, he’s rehired back the charging team, which is great, most of them, at least. And all of the other electric vehicle companies that I’m studying — Ford (F), GM (GM) — they’re all scared,” he explains.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Melanie Riehl
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Video Transcript
The votes are in and Tesla shareholders approving Ceo Elon Musk’s controversial $56 billion pay package Musk taking the stage after the results and offering some characteristically optimistic goals for the EV maker.
It’s when within the realm of possibility uh for Tesla to achieve evaluation 10 times that of the most valuable company today.
And if you just plot the points on the curve of how well autonomy is progressing and just believe the curve, um it’s headed towards uh unsupervised, full self driving very quickly at an exponential pace.
It, it actually gets way crazier.
Uh w when you think about the, the optimist uh robot, which is really a humanoid robot that is intended to um you know, be able to do anything you wanted to do.
Joining us now is Kevin Paffrath financial analyst and youtuber, meet Kevin Kevin.
Um Let me take it off here, right.
We’re, we’re gonna have self driving cars, Robo taxis where we let Tesla like navigate our cars around.
We’re gonna have a, a robot that does everything for us, I guess.
And the value of Tesla is gonna be some, you know, whatever trillions of dollars here what do you think?
Well, I think there’s a lot of hope built into that, but uh let’s say, look, the shareholder vote now behind us is great news.
It’s a big negative catalyst away for Tesla.
But you’re right, Elon has grand visions that you won’t have to drive anymore, which frankly, cars driving themselves in the long term, probably going to be a lot safer for the entire world.
They already are today on FSD financially safer.
So I think it’s a great thing and we’ve seen a lot of progress in full self driving.
I question the exponential progress.
Uh that Elon is talking about this idea that oh FSD is growing exponentially.
It’s, it’s growing.
But what we know with artificial intelligence, which Jensen Huang uh showed us in one of their artificial intelligence presentations was that the costs for artificial intelligence go up exponentially but progress actually more s curves and then Peters out so you get less progress with more costs.
And so going forward.
Yeah, Elon’s right.
We are going towards an autonomous future and it’s so great to see shareholders reaffirm their trust in Elon.
I just don’t think it’s going to happen as fast as he’s suggesting.
And I don’t think it necessarily is going to be as large in the long term, but that’s OK. We can be bullish on the stock in the next 2 to 4 years as Tes Tesla still has probably the best moat in full self driving that exists.
It’s not as big as it used to be.
I’d put it at about 18 to 24 months ahead of some of the competitors.
What we’re seeing out of Byd in China Xing Motors, but we’re definitely still ahead and Kevin, you did mention that pay package and it didn’t get approved.
And so I’m just curious, Kevin, is that what you expected?
And, and as a, as a shareholder, is that what you supported Kevin?
Yeah, it is.
So I did this little tax loss harvesting event for my fund PP the pricing power ETF where uh we sold uh in mid March and then bought back in at roughly the same price in mid April, but we missed the vote deadline by one day.
Uh That said I did make public that I was in favor of the vote passing and that I would vote for it if I could.
Now with this book, I’m gonna ask you, Kevin how it was?
Let me just get your take.
Why Kevin, why did you support it?
Oh, absolutely.
Well, so first of all, the deal was made in 2018 and it was very public.
This was like a YOLO call option for Elon to go for this.
Frankly.
If that same deal was made today at those prices, then everybody would look at that as a shareholder and go well, at least 70% like we had that.
Of course, we’re going to support if you can move the market capitalization of this stock essentially exponentially.
Of course, we’re going to support paying for you.
So receiving that and then being frustrated about Elon in the short term, I don’t think is fair.
I think it, it hits on an element of justice, but we could really go into sort of AAA different world there.
I don’t think justice was served by what the Delaware judge conducted.
Uh that said long term, we’ve got to look at Tesla as this is how I value it.
I don’t look at it as a 30 to $50 trillion humanoid optimist, you know, program look, that’s great.
That’s wonderful.
Sort of icing on the cake as a financial advisor and running A I, I can’t price that in.
So what I do is I look at data, I look at quarter to data bottoming.
Early sales data indicates that Q two is not going to be as bad as feared.
I think it’s because of the financing.
They finally realized that offering people a lower monthly payment just 0.99% APR in May.
Now they’re at 1.99.
Uh in June is a sign that people are payment sensitive, not necessarily price sensitive.
And I think that’s actually going to help skyrocket Tesla shares and form a bottom here in delivery numbers.
We already know that margins have bottomed.
They’re the only automotive company to have over 18% gross margins excluding the cyber truck on vehicles, especially electric vehicles.
Most companies lose money on these.
So really, what Elon’s doing here is he’s creating a bottoming process in the actual manufacturing of electric vehicles.
At the same time, he’s rehired back the charging team, which is great, most of them at least.
And all of the other electric vehicle companies that I’m studying.
Ford GM, they’re all scared, they’re reducing their exposure to electric vehicles.
Elon is creating a massive United States electric vehicle moat for Tesla and Tesla shareholders, Kevin.
If that said 11 last thing quickly, if, if China were able to sell evs here, I would not own Tesla.
So you are relying on the government to protect you a bit.
