Gainers📈 & Losers📉

Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 17th December 2024:

• I Pulled the Plug 🔌💥

• Unbiased Investing News 📰

I Pulled the Plug 🔌💥 

It’s getting a little out of hand.

I love Tesla, I love Elon & I think Tesla have big things in store for the future. You know that if you’ve been checking in with my updates.

But when I said “the future” I didn’t exactly have December 2024 in mind so a 125% gain in 2 months has got me reaching for the brakes.

Tesla at $1.5 Trillion? Sheesh 😰 

That valuation is a real problem right now.

A $1.5 trillion market cap means that Tesla is trading at nearly 150x PE ratio for the next 12 months earnings.

That is obscene. If you use revenue as the metric & compare Tesla to a competitor like Rivian, Tesla’s multiple comes out over 4x higher than Rivian.

Yeah, Rivian’s still posting losses. But they’re also scaling production like crazy (thanks to a $5.8B Volkswagen partnership + a $6.6B federal loan). Margins are getting better, capacity’s expanding & delivering ~15k vehicles per quarter.

So that leaves us with the question… is Tesla really worth 4x more than Rivian on a per revenue basis? 😬 

I’ll leave it up to you. All I’m saying is at $1.5 trillion, the bar for Tesla is sitting higher than Elon’s Starlink satellites.

 Model Q: Low-Cost, High-Risk🚗

These crazy expectations are even more difficult with Tesla taking a left turn on their business model.

Next year we should be seeing a new lower-cost E. Introducing… The Model Q. 🎉 

The price tag under should come in $30k (thanks to $7.5k federal EV credits). What’s not to like?

Well here’s what’s making me nervous:

1. Margins Go Poof 💨
   Lower car price = thinner profit margins.

2. Tariffs Could Be Brutal
   Even though Elon & Trump seem like besties, Trump’s been pretty clear. He’s eyeing up 25% tariffs on Canada & Mexico. Both happen to be pretty important suppliers for Tesla’s parts. If tariffs come in & push costs up, margins take another hit.

Right now, Tesla’s profits are decent. Gross margins hit record lows on per-unit costs last quarter (~$35.1k per vehicle). That juiced the adjusted EBITDA margins to 18.5%.

But the Model Q changes the game. Tesla’s cheapest car is going to hurt profitability especially if tariffs & inflation pile on top.

Has He Got Too Many Hats?🧢

Speaking of Trump & Elon being besties, does it seem to you like Elon is wrapped up in the politics a bit too much?

Let’s be honest, he was already stretched thin. CEO of Tesla, SpaceX, Neuralink, xAI, The Boring Company & X.

Now he’s in Trump’s newly created Department of Government Efficiency (DOGE) it really leaves me wondering is Tesla’s still his #1 priority?

It doesn’t feel like it. And when he puts his attention elsewhere, Tesla stock usually suffers.

My Plan 🗺️ 

Well, I’ve sold all my current holdings of Tesla. This current valuation is unsustainable, (in my opinion).

Could I be wrong? Sure. Could Tesla keep rallying? Maybe.

Will I regret closing positions for an average of 98% profit on a company I think is fundamentally over valued? I doubt it.

Investors can be funny. Everyone’s quick to forget that Tesla has regularly dropped 25%+ over the years & sunk as much as 75% at times.

Now this isn’t saying I’m shorting Tesla. I would never even attempt it. I’m just closing what I have & waiting for the pullback when the valuation is sane again.

I’ll let you know when I think that is.

Unbiased Investing News 📰 

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