Anyone that has followed Tesla CEO Elon Musk for a while knows the billionaire isn't afraid to make big promises.
From his efforts with Neuralink to allow people to move computer mice with their minds to his Optimus robots, Musk has made it clear he's determined to bring a seemingly sci-fi future into reality with several of his projects.
Related: Here's why the Tesla bears are starting to outnumber the bulls
Despite Musk's highly creative vision, Wall Street tends to be reserved about Tesla despite its early entry into the EV market and the advantage it gained because of it. Investor Gary Black shed some light on the reasons why that is in a tweet posted on Feb. 24, revealing an interesting tidbit about what Tesla chooses not to share.
"Investors keep asking why WS doesn't put much value on TSLA AI (robotaxi, FSD licensing, Optimus, Dojo). Short answer: TSLA doesn't disclose results for its AI businesses—unlike NVDA, which is 100% specialty chips including AI chips. How can one expect instit investors to put a value on something that the company doesn’t disclose on a regular basis and which remains invisible? You’d be making up numbers that one can’t verify," Black wrote.
Investors keep asking why WS doesn’t put much value on $TSLA AI (robotaxi, FSD licensing, Optimus, Dojo). Short answer: TSLA doesn’t disclose results for its AI businesses — unlike NVDA, which is 100% specialty chips including AI chips. How can one expect instit investors to…
— Gary Black (@garyblack00) February 24, 2024
The investor also went on to explain how he saw TSLA in 2017-2018 versus how he sees the business today.
"Sure, we can say FSD is going to be huge, and wow look at the progress Optimus is making, but it’s not disciplined to put a made-up multiple on huge or wow. This is very different from 2017-2018 when I first got involved in valuing TSLA where one could size the auto market, forecast EV adoption, forecast TSLA share of EVs, assume an ASP and gross margin, tax effect it and come up with an earnings or ebitda forecast five years out, discount it back, and put a value on it." he said.
"This dissonance is not about being too old or a baby boomer or some other demographic factor. It’s about financial discipline, best practice, and valuing a fairly transparent earnings stream vs putting a pie-in-the-sky multiple on hype."
A commenter tried to contest Black's take by saying that "people can and do model it," but Black was quick to say that the headline cited—"Tesla's Full Self-Driving is already worth $1B-$3B in sales, with upside to $75B by 2030: Goldman"—is just "making up numbers."
Exactly my point: Look at the headline - “Tesla’s FSD is already worth $1B-$3B in sales with upside to $75B.” That’s just making up numbers. If TSLA wants WS to model it, there needs to be better disclosure.
— Gary Black (@garyblack00) February 25, 2024
"If TSLA wants WS to model it, there needs to be better disclosure," Black said.
