Tesla: The Unstoppable Bull Run Despite Delivery Miss

In the ever-evolving world of investing, one name has consistently captured the spotlight: Tesla (TSLA). Despite a recent delivery miss, the electric vehicle (EV) giant remains a top holding for Gary Black's The Future Fund, trailing only Nvidia (NVDA) and Alphabet (GOOGL). Let's dive into the reasons behind this bullish stance and explore the data that supports it.



First, let's address the elephant in the room: Tesla's recent delivery miss. In the fourth quarter of 2024, the company delivered 495,570 vehicles, falling short of analyst expectations of 506,763. This marked Tesla's first annual sales decline, raising concerns among investors. However, it's essential to put this setback into perspective. Tesla's stock has still managed to accumulate a rise of over 60% since the U.S. Presidential election, highlighting the company's resilience and long-term potential.



Now, let's examine the factors that contribute to Tesla's enduring appeal among investors like Gary Black. One key aspect is the company's valuation and earnings growth prospects. As of 2025-01-07, Tesla's P/E Ratio stands at 112.30874, which is significantly higher than other tech giants in The Future Fund's portfolio, such as NVIDIA (35.45), Alphabet (22.54), Eli Lilly (17.45), Salesforce (44.57), and Netflix (24.77). This higher valuation reflects investors' confidence in Tesla's long-term growth potential.

Tesla's forward EPS is 3.24, which, while lower than some other tech giants in the portfolio, still indicates solid earnings growth. Moreover, Tesla's performance in 2024 was lower than most other tech giants in the portfolio, except for Salesforce. This underperformance can be attributed to factors such as price cuts of electric vehicles and their impact on earnings, as well as the fund's disciplined approach to valuation and cautious stance on robotaxi technology.

Despite these challenges, Tesla's stock has shown remarkable resilience, climbing to become the third-largest holding at The Future Fund LLC. This bullish outlook is supported by several potential catalysts, including a Federal Reserve rate cut, a potential Full Self-Driving (FSD) licensing deal, a streamlined autonomous driving licensing process, the anticipated launch of the Model Q Compact, and the projected introduction of generalized unsupervised FSD by the end of FY 2025.

Furthermore, the Delaware Supreme Court is expected to overturn Chancellor McCormick’s 2018 compensation ruling late in 2025, which could be favorable for Tesla's stock. Additionally, transparency and progress in the production of the Optimus robot, set to begin in FY 2026, are also seen as positive factors for the company's stock.

In conclusion, Tesla's recent delivery miss has not dampened investors' enthusiasm for the EV giant. The company's valuation, earnings growth prospects, and potential catalysts continue to drive its stock price higher, solidifying its position as a top holding for The Future Fund. As Gary Black's investment philosophy emphasizes strategic position adjustment rather than active trading, Tesla remains a significant holding despite position reductions. By maintaining a disciplined approach to position sizing and risk management, The Future Fund has navigated the challenges posed by Tesla's ambitious projects and changing market conditions, ultimately reaping the benefits of the company's long-term growth potential.